SEOUL, May 23: Seoul shares pulled back from 7-week highs on Thursday on concerns the U.S. Federal Reserve may start to wind down its stimulus programme in coming months, buy firm gains in telecommunication stocks and SK Hynix gave support.
‘Worries about a U.S. Exit have chilled market sentiment,’ said Lee Jae-hun, a market analyst at Mirae Asset Securities.
‘If the exit is well-timed, the focus may shift from the end of liquidity injection to an improved economic backdrop and corporate earnings. This would bring about a fundamental upgrade in the share market,’ Lee added.
The Korea Composite Stock Price Index was down 0.66 percent at 1,980.71 points as of 0136 GMT.
Foreign investors turned net sellers after four straight sessions of buying, offloading a net 30 billion won worth of stocks.
Shares in SK Hynix Inc advanced 1.8 percent on expectations the memory chip maker’s profit will jump in the second quarter. SK Hynix was the most-active stock on the main KOSPI.
‘The company’s earnings forecast is being sharply revised as the pace of demand recovery is faster than output is increasing,’ said Byun Han-joon, an analyst at KB Investment & Securities.
He expects the firm to post around 900 billion won ($808 million) in operating profit in the second quarter. This would be nearly triple the 317 billion in the first quarter.
Telecommunication stocks rallied as investors sought out less-cyclical sector plays with high dividends.
SK Telecom’s 12-month forward dividend yield was 4.4 and KT’s 5.1, compared with the broader market’s 1.2, ThomsonReuters StarMine data showed
Shares in SK Telecom gained 2.1 percent and KT Corp advanced 1.6 percent.
Crude oil refiners lost ground after oil prices fell overnight. Lower crude oil prices weaken the prices of oil products and tend to weigh on refiners’ earnings, said Park Yeon-ju, an analyst at KDB Daewoo Securities.
Brent crude futures fell $1.31 to settle at $102.6 per barrel in their U.S. Trade overnight.
Shares in S-Oil fell 1.5 percent and SK Innovation slid 3.6 percent.
LED products makers LG Innotek and Kumho Electric rose 1.2 percent and 2.5 percent, reflecting strength in light emitting diode fixture demand, analysts said. (agencies)
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