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S.Korean shares slip on autos, refiners bounce

Published 04/04/2011, 11:04 PM
Updated 04/04/2011, 11:08 PM
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* KOSPI edges lower, foreign buying momentum slows

* Refiners rebound after sharp falls

* Autos, air carriers dip

By Jungyoun Park

SEOUL, April 5 (Reuters) - Seoul shares dipped on Tuesday as foreign investors' appetite weakened slightly after 14 straight days of buying, though the benchmark index hovered near an all-time high.

The Korea Composite Stock Price Index (KOSPI) was down 0.26 percent at 2,110.45 points by 0218 GMT.

"The market is slipping as profit-making moves take place at the index's current level. Foreign investors are not buying as aggressively either," said Lee Sun-yeb, a market analyst at Shinhan Investment Corp.

Foreign buying, though poised to continue for a 15th consecutive session, weakened. Foreign investors were buyers of a net 17 billion Korean won ($15.6 mln) worth of stocks, substantially down from purchases of around 181 billion won and 737 billion won posted in the previous two sessions.

The main index has risen 10 percent since the buying streak began in mid-March.

Crude oil refiners bounced after their sharp losses in the previous session on worries about product price cuts.

The prospect that South Korea's SK Energy's gasoline and diesel price cuts at the weekend could be followed by government pressure on other refiners to rein in energy costs sent shares in the sector down sharply on Monday. [ID:nL3E7F410N]

"At the share's current levels, the market has largely digested negative implications of price cuts, which would weigh on second quarter earnings," said Cha Hong-sun, an analyst at Hanwha Securities.

Shares in SK Innovation , the country's top crude oil refiner, were trading at a price earnings multiple of 8.8 and 1.4 times their book value, ThomsonReuters Starmine data showed. This compared with the broader KOSPI's PE multiple and price-to-book value ratio of around 10 and 1.7 respectively.

"Investors are now more focused on longer-term earnings prospects, which are solid, thanks to high demand and limited supply," Cha added.

South Korean refiners are broadly seen benefiting from a manufacturing shutdown of their Japanese counterparts due to the devastating March 11 earthquake and tsunami.

Shares in S-Oil rose 0.7 percent and SK Innovation advanced 0.5 percent.

But automakers fell as investors grew more cautious about the sector on the back of the won currency's latest gains.

"If the won-dollar exchange rate falls below 1,000 won, the negative impact on earnings will become much more visible," said Kim Yun-ki, an analyst at Mirae Asset Securities.

The won stood around 1,090 won per dollar on Tuesday.

Shares in Hyundai Motor fell 1.2 percent and Kia Motors shed 0.9 percent.

Air carriers dipped on oil price gains, which make imports of jet fuel more costly.

Shares in Korean Air Line , the country's No.1 air carrier, fell 1.2 percent and Asiana Airline declined 1.6 percent.

But firm gains in techs helped.

Shares in LG Display surged 3.9 percent and Hynix Semiconductor rose 2 percent. (Reporting by Jungyoun Park; Editing by Clarence Fernandez)

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