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Seoul stocks pare gains as Samsung Elec weighs, won up on Fed
June 19, 2014 / 3:15 AM / 3 years ago

Seoul stocks pare gains as Samsung Elec weighs, won up on Fed

* Samsung Elec Q2 earnings outlook unnerves offshore
    * Fed's dovish stance supports the won
    * Won poised to snap 5-day slide

    SEOUL, June 19 (Reuters) - Seoul shares pared earlier gains
on Thursday morning as concerns over a grim quarterly earnings
outlook for Samsung Electronics offset optimism from the U.S.
Federal Reserve's decision to maintain its accommodative stance.
    The Korea Composite Stock Price Index (KOSPI) was
down 0.1 percent at 1,987.32 points as of 0245 GMT after
climbing as high as 1,999.11.
    "The Fed's dovish message helped ease concerns over an
earlier than expected policy tightening to prompt a relief
rally, but another concern has crept up to limit the rise:
Samsung Electronics' earnings outlook," said Hanyang Securities
market analyst Lim Dong-rak.
    Samsung Electronics Co Ltd, which accounts for
15 percent of the KOSPI, fell 2 percent on worries about future
earnings after local brokerages cut their April-June earnings
    "Investors, in the short term, are focusing more on
quarterly earnings rather than Samsung Group's restructuring,"
said Seo Won-seok, a tech analyst at Korea Investment &
    "The recent strength in the won, along with increased
spending in marketing due to weakening sales, attributed to the
downward adjusted earnings forecast," added Seo while estimating
the tech giant's second quarter operating profit at 7.9 trillion
won ($7.76 billion) from 8.8 trillion won earlier. 
    Underpinning the main bourse were mobile carriers and
steelmakers, with SK Telecom Co Ltd and POSCO
 advancing 4.7 percent and 2.6 percent, respectively.
    The Fed wrapped up its two-day policy meeting on Wednesday
by striking a dovish tone, cutting its forecasts for U.S.
economic growth to a range between 2.1 percent and 2.3 percent
for 2014 while repeating that interest rates would remain near
zero "for a considerable time" after the bond buying ends.
    The U.S. central bank decided to reduce its asset purchases
by another $10 billion as expected. 
    In the currency market, the won rose against the
dollar and appeared poised to snap a five-day losing streak,
fuelled by the outcome of the Fed meeting.
    The local currency was quoted at 1,018.6 versus
the dollar as of 0245 GMT, up 0.4 percent from Wednesday's
onshore close at 1,022.4.
    Dealers, however, said dollar-purchases by companies
dominated early domestic trade to cap the won's rise, and also
variables for further won gains were lacking.
    "It appears that dollar demand by importers is having the
edge, but it's nothing meaningful," said a currency dealer at a
domestic bank. "It's unlikely the pair will trade beyond the
current level." 
    The won has fallen in each of the past five sessions,
shedding 0.7 percent during the period through Wednesday, the
longest losing streak since mid-January.
                       0245 GMT    Prev close
 Dollar/won            1,018.6       1,022.4
 Yen/won            9.9931/892       10.0280
 *KTB futures           106.31        106.20
 KOSPI                1,987.32      1,989.49
 * Front-month futures on three-year treasury bonds
($1 = 1017.8000 South Korean won)

 (Reporting by Jungmin Jang; Additional reporting by Yena Park;
Editing by Jacqueline Wong)

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