"US President Barack Obama's comments came as another negative to markets that were still dealing with China's curbs on bank lending, and immediately dampened investor appetite for stocks," said Kim Young-june, a market analyst at SK Securities. "However I do not think the market environment is going to worsen substantially further from here. The index has pretty firm support at the low 1,500 point level," Kim added. Institutions were sellers of a net 287.1 billion won ($249.3 million) worth of stocks and foreign investors offloaded a net 430.5 billion won.
Banking issues fell across the board following declines in US peers on Thursday after President Obama threatened Wall Street banks with a proposal to limit financial risk-taking. "The fact Obama was taking such measures seemed to indicate that US banks may still be mired in trouble, and that is weighing on sentiment towards the sector," said Ku Yong-uk, an analyst at Daewoo Securities.
"The threats follow China's recent moves to curb bank lending and tighten monetary policy, so banks were basically dealt with a double blow," said Hwang Huhn, an analyst at Woori Investment & Securities. KB Financial Group lost 3.7 percent, and Shinhan Financial Group declined 4.1 percent.
Shares in Korean Air Line fell 2.17 percent despite posting a near-seven-fold jump in quarterly operating profit, as a cargo sector recovery picked up pace and the stronger won lowered costs. "Korean Air's earnings were good and in line with markets' expectations. We think its earnings will continue to pick up fast as demand recovers with global economies improving and as the won strengthens," said Hyun Min-kyo, a market analyst at Shinhan Investment Corp.
"Today's share falls will probably be short-lived as the won's weakness today as dampened sentiment," Hyun added. Doosan Heavy Industries, a manufacturer of equipment for nuclear power facilities, outperformed the broader market helped by a positive note from J.P. Morgan, up 1.51 percent to 94,400 won.
J.P. Morgan upgraded Doosan Heavy to "overweight" from "underweight" and raised its target price by 43 percent to 110,000 won. KOPEC, a nuclear power facility designer, finished up 1.07 percent. Auto issues advanced helped by the won's weakness, with Hyundai Motor up 0.46 percent and Kia Motors advancing 1.03 percent. Retail investors purchased a net 760.7 billion won worth of stocks.
Decliners outnumbered advancers 639 to 184 with 47 issues ending flat. Trading volume stood at 605 million shares worth 6.5 trillion won, compared with 536.8 million shares worth 5.66 trillion won in the previous session. The KOSPI 200 March futures index ended down 6.25 points at 220.3, and the KOSPI 200 spot index fell 5.48 points to 220.68. The junior Kosdaq market fell 0.43 percent to close at 546.66.