"Tightening moves being made or anticipated in China and the United States are prompting investors to lock in profits. You could say that the extra liquidity which in recent weeks fuelled stocks is being squeezed a bit as investors seek safer assets," said a portfolio manager at a European fund house who declined to be named.
"Following strong results from Samsung Electronics, we are also seeing investors locking in profits. Domestic retail investors who have been putting borrowed money into stocks are also pulling back," said Oh Hyun-seok, head of research strategy at Samsung Securities.
The Korea Composite Stock Price Index (KOSPI) finished down 2.44 percent to 1,602.43 points, its largest daily percentage loss since November 27, 2009 and its lowest close since December 2. Foreign investors were sellers of a net 80.2 billion won ($69.41 million) worth of stocks, after picking up a net 130.7 billion won in the previous session.
Foreign investors bought a net 657.2 billion won worth of stocks in January, posting an 11th consecutive month of net buying. Shares in Samsung Electronics lost 2.97 percent to 784,000 won, the lowest close in five weeks, despite the firm posting a forecast-beating set of quarterly results.
"Today's share fall has nothing to do with the company's fundamentals, which are very solid," said Lee Seung-joon, a fund manager at Midas Asset Management. "Investors were locking in profits amid rising risk-averse sentiment. Samsung Electronics shares have posted good gains, and therefore became targets," Lee added.
Shares in Korea District Heating Corp, which made its debut in the Seoul market on Friday, ended trade at 76,500 won per share versus the initial public offering (IPO) price of 45,000 won, after hitting as high as 99,700 won. But defensive issues in telecommunications and consumption sectors outperformed. KT, South Korea's dominant fixed-line operator, fell a mere 0.4 percent despite the company posting a net loss of 448.3 billion won ($389.1 million) due to retirement costs.
KT&G, South Korea's tobacco monopoly, rose 0.45 percent. Institutions picked up a net 21.2 billion won worth of stocks, and retail investors bought a net 54.4 billion won. Decliners outnumbered advancers 700 to 140 with 39 issues ending flat.
Trading volume stood at 467.4 million shares worth 5.6 trillion won, compared with 473.3 million shares worth 5.4 trillion won in the previous session. The KOSPI 200 March futures index ended down 5.75 points at 209.40, and the KOSPI 200 spot index slid 5.33 points to 210.34. The junior Kosdaq market fell 4.03 percent to close at 496.57.