* Soft yen, weak earnings dent exporters
* Samsung Elec down 2.5 pct, Hyundai Motor off 3.4 pct
* Vanguard’s index-switch for tracking impacts Seoul
SEOUL, Jan 25 (Reuters) - South Korean shares fell 0.9 percent on Friday to their lowest close since Dec. 4 as the market suffered its largest foreign selloff in 16 months and automakers reported weak earnings.
The Korea Composite Stock Price Index (KOSPI) declined to 1,946.69 points, as foreign investors sold a net 518.8 billion won ($485.43 million) worth of KOSPI shares.
Auto stocks extended losses from the previous session, with Hyundai Motor closing down 3.4 percent and sibling Kia Motors plunging 4.9 percent to over two-year lows on weak quarterly earnings.
“Not only did Hyundai Motor and Kia Motors’ weak earnings weigh, but foreign investors appear to have taken profits and bet on the KOSPI falling further,” said Kim Soon-young, an analyst at IBK Securities.
The KOSPI has been pressured by U.S. fund manager Vanguard group’s decision to switch from the MSCI index to the FTSE to track markets for its $67 billion emerging market fund.
The move, which took effect earlier this month, is expected to wipe about 9 trillion won ($8.5 billion) from Seoul stocks by July, with some 2.45 trillion won in foreign funds seen wiped from heavyweight Samsung Electronics alone.
On Friday, the tech giant fell 2.5 percent after saying it will keep its 2013 annual investment plan unchanged at 2012 levels, turning cautious for the first time since the global financial crisis.
Samsung, Hyundai and Kia together account for 22.4 percent of the KOSPI’s market capitalisation.
Also denting shares in exporters on Friday was the weakening yen as it gives a price advantage to Japanese rivals. The yen hit a 2 1/2-year low against the dollar on Friday.
Some defensive plays such as utilities and banking bucked trends, with Korea Electric Power Corp gaining 1.3 percent while Woori Finance Holdings rose 0.9 percent.
Decliners outnumbered gainers 499 to 309. The KOSPI 200 benchmark of core stocks closed down 1 percent, while the junior KOSDAQ edged 0.4 percent lower.
Move on day -0.9 percent
12-month high 2,057.28 14 March 2012
12-month low 1,769.31 25 July 2012
Change on yr -4.2 percent
All-time high 2,231.47 27 April 2011
All-time low 93.10 6 January 1981 ($1 = 1068.7500 Korean won) (Reporting by Joyce Lee; Editing by Richard Borsuk)