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Korea shares ends lower as OTC Kosdaq crumbles

SEOUL: South Korea's benchmark index closed slightly lower on Monday while over-the-counter shares fell sharply, hurt by a flood of new issues and the pending debut of a third market, analysts said.

The Korea Composite Stock Price Index (KOSPI) was down 5.06 points or 0.59 percent at 850.51.

"The market has no upside momentum. With no palatable investment plays and no clear trend, investors sold select blue chips and small caps that had risen recently on the main exchange," said Kim Jin-soo, an analyst at LG Investment and Securities. Despite the long-awaited announcement on Friday for plans for a 10-1 stock split, top-ranked mobile telephone service provider SK Telecom fell 290,000 won to 3.85 million.

Steel giant Pohang Iron and Steel Co (POSCO) fell 2,500 won to 104,000.

Investors pocketed profits from small caps that have gained recently.

Biotechnology stocks slipped, with the sub-index for drug and medicine down 1.25 percent.

Food and pharmaceutical producer Cheil Jedang fell 4,300 won to 70,800.

Korea Green Cross, a pharmaceutical company, was down 4,100 won at 62,900.

Pacific Pharmaceutical was down 2,150 at 20,000. Chip stocks bucked the market's decline, with the world's largest memory chip maker, Samsung Electronics, up 9,000 won at 283,000.

Hyundai Electronics was up 1,400 won at 22,200.

KOSDAQ SEES RECORD LIMIT LOWS

The Kosdaq over-the-counter market had one of its worst ever outings, ending down 18.73 points or 7.51 percent at 230.82.

Over half the shares listed on the Kosdaq, 258 of 483, fell by its daily maximum limit of 12 percent, the most ever.

Analysts said liquidity is drying up on the Kosdaq as new issues enter the market and as speculative investors sell shares ahead of the pending debut of a third stock market.

"Most investors on the Kosdaq are speculative investors. They are ready to dump the Kosdaq and are preparing to jump ship to the third market, which is expected to open in coming weeks," said Lee Sang-koo, a Kosdaq analyst at Hyundai Securities. Internet-related shares tumbled, with software developer Handysoft down 116,000 won to 851,000 and software and Internet service provider Serome Technology off 12,000 won at 91,000.

Wellink, a telecommunications equipment maker, fell 32,500 won to 241,500. On the main exchange, trade volume was light at 225.97 million shares, down from on Friday's 300.84 million shares.

Trade was valued at 2.52 trillion won compared to 3.27 trillion won on Friday.

Individual investors sold a net 192.9 billion won worth of shares.

Foreign investors bought a net 134.1 billion won worth.

Overall, institutional investors bought a net 24.1 billion won worth of shares but investment trust companies were sellers, unloading a net 21.1 billion won worth of stocks.

Over the next month or so many of the one-year funds the trust companies mange will expire and they need cash for potential redemptions of equities-linked beneficiary certificates.

Decliners outpaced advancing issues 443 to 399 with 54 shares unchanged.

The March futures on the Kospi: closed up 0.05 points at 106.75, while the underlying spot index ended down 0.56 points at 105.75.

Analysts said they expect the Kospi to remain weak on Tuesday while they said there is a chance of a limited technical rebound on the Kosdaq among those issues sold heavily today. -Reuters