Stocks falter after Samsung earnings disappoint

Stocks dipped following Samsung Electronics' weak earnings report. Semiconductor shares fell, while auto and energy stocks saw gains. The won strengthened against the dollar.

Screens in Hana Bank's trading room in central Seoul show the Kospi closing at 2,497.09 points on Wednesday, down 0.07 percent, or 1.72 points, from the previous trading session. [NEWS1]

Shares closed slightly lower Wednesday, hurt by declines in semiconductor stocks, after chip giant Samsung Electronics reported its fourth-quarter earnings. The won fell in value against the dollar.

The Kospi fell 1.72 points, or 0.07 percent, to 2,497.09.

Trade volume was moderate at 443.1 million shares worth 8.69 trillion won ($6.50 billion), with losers outpacing winners 525 to 350.

Market watchers cited the mixed performance of overnight Wall Street trading as well as Samsung Electronics' lukewarm fourth-quarter earnings.

Samsung Electronics said its fourth-quarter operating profit sank 34.4 percent from a year earlier due largely to sluggish semiconductor business, but its memory chip segment turned to the black as demand recovered.

Market observers expect Samsung's memory chip business to shift to net profit in the first quarter of this year, backed by recovering demand for dynamic random-access memory.

Kim Dong-won, an analyst at KB Securities, expects the company to “enter a phase of full-fledged earnings improvement thanks to an expected rebound in DRAM prices.”

Overnight, U.S. stocks closed mixed as Wall Street waited for the Federal Reserve's latest decision on interest rates. The Dow Jones Industrial Average inched up 0.35 percent, while the S&P 500 shed 0.06 percent. The Nasdaq composite dropped 0.76 percent.

In Seoul, chip shares took beatings, with Samsung Electronics slumping 2.15 percent to 72,700 won and SK hynix tumbling 1.61 percent to 134,700 won.

Naver and Kakao also closed lower, falling 4.30 percent and 3.31 percent to 200,500 won and 52,500 won, respectively.

Auto and energy shares, however, enjoyed brisk trading, with Hyundai Motor climbing 2.42 percent to 194,600, Kia jumping 5 percent to 102,900 won and LG Chem rising 1.88 percent to 434,500 won.

Samsung Construction & Trade Corporation rose 6.40 percent to 138,000 won.

The local currency closed at 1,334.60 won against the dollar, up 5.20 won from the previous session's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year government bonds fell 0.6 points to 3.261 percent, and the return on the benchmark U.S. 10-year government bonds dropped 4.5 points to 4.032 percent.

BY KIM JU-YEON, YONHAP [kim.juyeon2@joongang.co.kr]