S.Korean stocks fall to 2-week low, won firmer on export demand

Mon May 26, 2014 11:07pm EDT

* Institutional investors headed for 9th day of net selling
    * Won's gain capped by caution over intervention

    SEOUL, May 27 (Reuters) - Seoul shares slipped to their
lowest level in two weeks on Tuesday morning, dragged down by
institutional investors, while the won modestly
strengthened against the dollar on exporters' demand for
month-end settlements.
    The Korea Composite Stock Price Index (KOSPI) was
down 1.1 percent at 1,988.72 points as of 0250 GMT, the weakest
level since May 14.   
    "The market confronts selling pressure from institutional
investors, but lack of upwards momentum is leaving the market
vulnerable," Kiwoom Securities analyst Jun Ji-won said.
    Domestic institutional investors offloaded a net 50 billion
won ($48.8 million), poised to extend their net selling streak
to a ninth session. They have net sold 1.3 trillion won during
their streak through Monday.
    "The market is expected show lacklustre movement until the
European Central Bank meeting in June, where investors are
expecting policy easing to be announced," Jun said. 
    European Central Bank Chief Mario Draghi said on Monday the
bank was on guard against deflation and ready to act with
conventional and targeted measures, while a broad asset-buying
plan remained an option. 
    Market bellwether Samsung Electronics Co Ltd 
slipped 1.3 percent while the second-largest component of the
market, Hyundai Motor Co, declined 2.3 percent.
    Meanwhile, the tech-heavy junior KOSDAQ fell 1
percent, despite the heavyweight Daum Communications Corp
 soaring to a daily limit of 15 percent.
    Kakao Corp, the dominant messaging app firm in South Korea,
has agreed to buy internet portal company Daum Communications in
a $3.3 billion stock deal, circumventing a potentially
time-consuming IPO process with a back-door
listing. 
    Daum shares were suspended from trading on Monday.
    In the foreign exchange market, the won firmed
modestly on month-end settlement flows by exporters amid caution
about intervention. South Korean foreign exchange authorities
bought dollars this month to curb the pace of the won's
appreciation.
    The local currency was quoted at 1,023.3 against
the dollar as of 0250 GMT, up 0.1 percent from Monday's onshore
close at 1,024.0.
                       0250 GMT    Prev close
 Dollar/won            1,023.3       1,024.0
 Yen/won           10.0383/343       10.0387
 *KTB futures           106.07        106.04
 KOSPI                1,988.72      2,010.35
 * Front-month futures on three-year treasury bonds
($1 = 1023.8500 Korean Won)

 (Reporting by Jungmin Jang; Editing by Stephen Coates)