Seoul shares trade lower on currency woes

SEOUL, Sept. 29 (Yonhap) -- Reversing earlier gains, South Korean stocks traded lower late Monday morning as currency woes overshadowed expectations on the passage of the U.S. government's financial bailout plan, analysts said.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 6.74 points, or 0.46
percent, to 1,469.59 as of 11:20 a.m.
"Investor sentiment remained fragile amid the local currency's steep falls,
raising concerns over the banking sector and smaller companies' troubles related
to currency option contracts," said Bae Sung-young, an analyst at Hyundai
Securities. "Some investors seemed doubtful about the effect the U.S.
government's financial sector bailout proposal would have."
U.S. lawmakers are set to vote on Monday (local time) on the government's US$700
billion proposal to buy bad debts in a bid to bail out the teetering financial
sector after congressional leaders reached a tentative deal early Sunday.
The local currency was trading at 1,195.50 won to the U.S. dollar as of 11:20
a.m., down 35 won from Friday's close, shrugging off a verbal intervention and
previous optimism over the bailout, dealers said.
Choi Jong-ku, the finance ministry's international financial division, said that
growing volatility in the local currency market is "excessive" and South Korea
will take necessary actions to stabilize it.
South Korea's currency market has been suffering from a dollar shortage as banks
and companies are rushing to the safer U.S. dollar on concerns over a financial
crisis sparked by the collapse of investment giant Lehman Brothers Holdings Inc.
South Korea's Finance Ministry said Friday that it will inject at least $10
billion into the local won-dollar swap market in an effort to calm the turmoil
and provide added liquidity.
Financial shares lost ground. Top financial services company Woori Finance
Holdings declined 3.23 percent and its rival Shinhan Financial Group fell 1.97
percent.
Tech blue chips traded in positive territory with chip giant Hynix Semiconductor
rising 2.58 percent.
Hanwha gained 3.27 percent on a report that Korea Deposit Insurance Corp., South
Korea's state-run deposit insurance agency, plans to sell its 16-percent stake in
Korea Life Insurance Co. to Hanwha Group, which will help the group fully take
control of the insurer.
The possible stake sale would raise Hanwha's stake in Korea Life to 67 percent
from a current 51 percent.
sooyeon@yna.co.kr
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