Mar 30, 2020 | Updated: 11:42 AM EDT

Seoul Shares Fall 0.6 Pct As Samsung Elec Slides

Jun 11, 2013 03:16 PM EDT


* Samsung Elec ends at near 4-1/2 month closing low

* KEPCO E&C weighed by order worries

* Telcos shine as investors turn to defensives

SEOUL, June 11 (Reuters) - South Korean shares slipped on Tuesday as Samsung Electronics, the largest component of the main KOSPI, fell for a fourth straight session after its target price was downgraded.

The Korea Composite Stock Price Index finished down 0.62 percent at 1,920.68 points.

"Samsung Electronics is dragging the market down. Amid a lack of positive factors the market is struggling to hang on," said Ko Seung-hee, a market analyst at SK Securities.

Ko added however that market has strong support at around 1,920 points, where 12-month forward price to book-value ratio is estimated to be 1, while the market's current price to book value ratio is 1.1, ThomsonReuters StarMine data showed.

Shares of Samsung Electronics, which account for about 20 percent of the main bourse's market capitalisation, ended down 2.5 percent at 1,389,000 won, a near 4-1/2 month closing low.

It has tumbled nearly 10 percent since the middle of last week.

Morgan Stanley cut its target price on the world's No.1 memory chip maker by 3 percent to 1.75 million won, citing "declining margins for the mobile business" and also reducing sales forecast for Galaxy S4 handsets this year to 61 million from previous 71 million.

Morgan Stanley however said it expected "positive impact from new product cycles in GS4 Mini and Galaxy Note 3," adding share price looked "undervalued."

Samsung Electronics's 12-month forward price-earnings multiple and price to book-value ratio were 6.3 and 1.4, compared with the rival Apple Inc's 10.5 and 2.7 respectively, ThomsonReuters' StarMine data showed.

Shares in KEPCO Engineering & Construction Co Inc tumbled 5.8 percent amid mounting concerns that orders for both domestic and overseas nuclear power plants may be delayed, following a recent scandal that had prompted South Korea to shut down two of its nuclear power plants.

"Uncertainty around (KEPCO E&C's) nuclear power plant orders is expected to persist for sometime," said Bum Su-jin, an analyst at Samsung Securities, in a note dated Monday.

Industrial Bank of Korea (IBK) shares fell 2.5 percent amid talks South Korean government was seeking to sell its stake in the bank. IBK is majority-owned by South Korea's Ministry of Strategy and Finance.

Investors also regained an appetite for defensive shares with high dividend yields, prompting gains in telecommunication companies.

Shares in SK Telecom Co Ltd and LG Uplus Corp , which saw the second-highest volume on the KOSPI, both climbed 2.6 percent.

The KOSPI 200 benchmark of core stocks ended down 0.8 percent, while the junior KOSDAQ edged 0.16 percent higher.

Move on day -0.62 percent

12-month high 2,042.48 3 January 2013

12-month low 1,758.99 25 July 2012

Change on yr -3.8 percent

All-time high 2,231.47 27 April 2011

All-time low 93.10 6 January 1981 (Reporting by Jungyoun Park; Editing by Eric Meijer)

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