Seoul stocks slip ahead of ECB meeting, long weekend

Wed Jun 4, 2014 11:17pm EDT

* Foreigners set to snap net-buying streak
    * Won pares earlier losses on demand by exporters

    SEOUL, June 5 (Reuters) - Seoul shares eased on Thursday
morning as investors consolidated gains before the European
Central Bank's policy decision, key U.S. jobs data and a long
weekend.
    South Korean financial markets will be closed on Friday for
Memorial Day, and trade resumes on Monday.
    The Korea Composite Stock Price Index (KOSPI) was
down 0.7 percent at 1,993.97 points as of 0245 GMT, but has
barely changed this week.
    "With the ECB meeting and U.S. nonfarm payrolls data due,
investors are taking a cautious approach. Especially with so
much expectation of ECB's policy easing priced into the market
already," said IM Investment & Securities market analyst Kang
Hyun-gee.
    Economists in a Reuters poll expect the ECB to cut its main
refinancing rate by 15 basis points to 0.10 percent and the
deposit rate to -0.10 percent from zero. The ECB is also thought
likely to launch a refinancing operation aimed at funding
smaller business across the EU. 
    Meanwhile, growth in China's services sector retreated to a
four-month low in May, a private survey showed on Thursday,
further weighing on risk appetite.
    Foreign investors positioned as net sellers near the
mid-session, offloading 40 billion won ($39.09 million) after
bringing in 3 trillion won during their 16-day net buying streak
through Tuesday. Domestic institutional investors sold a net 141
billion won.
    Financial markets were closed on Wednesday for elections.
    Hyundai Motor Co, the second-largest component
in the KOSPI, fell 2 percent, while Shinhan Financial Group Co
Ltd declined 1.9 percent.
    In the foreign exchange market, the won pared earlier
losses versus the dollar to hold its ground. The currency was
supported by demand from exporters for settlements and
dollar-selling by offshore funds, which offset the greenback's
broad strength.
    The local currency was quoted at 1,023.4 against
the dollar as of 0245 GMT, compared with Tuesday's onshore close
at 1,023.1. On a weekly basis, the won shed 0.3 percent.
    Traders and analysts said that the won's strength against
the Japanese yen could raise the possibility of local foreign
exchange authorities buying dollars to indirectly keep the won
from rising further against the yen.
    "The authorities will not stand still to allow the won's
strength against the yen, as there are many risk events that
could weaken the yen further this month," said Yuna Park, a
currency and bond analyst at Dongbu Securities.
    An update on Japanese Prime Minister Abe Shinzo's "third
arrow" reforms is due to be announced later this month. Park
noted it could be one variable to prompt weakness in the yen,
which weighs on South Korean exporters' price competitiveness
against their Japanese rivals in overseas markets.
    The bid rate on the yen-won cross touched a low
of 9.9485 on Wednesday, its weakest since Sept. 9, 2008. The
cross rate was bid at 9.9747 as of 0245 GMT.    
                       0245 GMT    Prev close
 Dollar/won            1,023.4       1,023.1
 Yen/won            9.9795/747        9.9552
 *KTB futures           106.00        106.04
 KOSPI                1,993.97      2,008.56
 * Front-month futures on three-year treasury bonds
    ($1 = 1023.1500 South Korean Won)

 (Reporting by Jungmin Jang; Editing by Jacqueline Wong)
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.