(Updates to midday)
* Weakening yen threaten grim earnings outlook for
* Foreigners, institutional investors net sell to drag
SEOUL, Jan 2 South Korean shares looked set to
post their sharpest daily decline in nearly two months in the
first session of 2014, with further weakness in the yen hurting
the earnings outlook for heavyweight exporters such as Samsung
Electronics and Hyundai Motor.
The Korea Composite Stock Price Index (KOSPI) was
down 1.2 percent at 1,986.83 points as of 0244 GMT, its sharpest
daily percentage drop since mid-November.
"Mixed concerns about currency rates and corporate earnings
are dragging the two largest components, translating into the
market's decline," said Lee Eun-taek, an analyst at Dongbu
Samsung Electronics Co Ltd and Hyundai Motor Co
together account for 21.1 percent of the KOSPI's
Despite South Korea's 7.1 percent annual export growth in
December and the manufacturing sector's strongest expansion pace
in 7-months in December, the depreciating yen against the won
posed severe concerns for local exporters.
A weaker yen puts South Korean exporters under disadvantage
against their Japanese rivals in price competitiveness, alarming
local officials as well as Chinese officials.
Automakers Hyundai Motor and affiliate Kia Motors Corp
announced their annual sales target of 4 percent in
2014 on Thursday, which was the weakest target since 2003,
citing intensifying global competition and waning price
Hyundai Motor fell 4 percent and Kia Motors Corp plunged 4.5
percent by mid-session.
Samsung Electronics dropped 3.9 percent on
lacklustre forecasts of October-December earnings due to
currency moves and shrinking margins in its display business.
The banking sector bucked trend on the back of BS
Financial Group Inc, which jumped 2.5 percent after
being selected as preferred bidder to buy a regional bank unit
of Woori Finance Holdings Co on Tuesday.
Institutional and foreign investors sold a combined net 180
billion Korean won ($170.6 million) worth of KOSPI shares by
mid-session, weighing on the index.
Decliners outnumbered advancers 405 to 347.
The KOSPI 200 benchmark of core stocks was down 1.4
percent, while the junior KOSDAQ edged up 0.1 percent.
South Korean stock markets opened an hour later than usual
due to a kick-off meeting for the year, but will close at 0600
GMT as usual.
($1 = 1055.3500 Korean won)
(Reporting by Jungmin Jang; Editing by Kim Coghill)