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S Korean shares fall on first bond default in China

2014-03-07 17:10 Xinhua Web Editor: qindexing

South Korean shares ended in negative territory for the first time in three days Friday as the first corporate bond default in China dented market sentiment, but the fall was limited amid views that the default was not in danger of contagion.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 0. 94 points, or 0.05 percent, to close at 1,974.68. Trading volume stood at 224.67 million shares worth 3.21 trillion won (3.03 billion U.S. dollars).

Shanghai Chaori Solar Energy Science & Technology announced Wednesday that it would not be able to service a second interest payment of 89.8 million yuan (14.7 million U.S. dollars) due on Friday.

The first corporate bond default in China's onshore market hampered investors' sentiment, but the KOSPI trimmed most of earlier declines on views that the default will be a good thing for China.

Market watchers said that a normal economy needs such defaults to better price bonds, noting the default size was worth being ignored. Experts said defaults in lackluster sectors will help phase out excess capacity.

Foreign investors bought a net 21.3 billion won worth of stocks, but retail and institutional investors sold shares worth 11.7 billion won and 15.2 billion won respectively.

Large-cap shares ended mixed. Market bellwether Samsung Electronics gained 1 percent, and the world's largest shipbuilder Hyundai Heavy Industries added 0.5 percent. Top automaker Hyundai Motor declined 2 percent, and its affiliate Kia Motors slid 0.4 percent. The nation's No.1 web search engine NAVER lost 1.2 percent, and memory chip giant SK Hynix retreated 1.4 percent.

The South Korean currency was quoted at 1,060.6 won against the greenback, up 3.5 won from Thursday's close.

Bond prices ended mixed. The yield on the liquid three-year treasury notes closed unchanged at 2.89 percent, but the return on the benchmark 10-year government bonds rose 0.01 percentage point to 3.58 percent.

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