Seoul stocks tumble as Samsung shareholder return plan disappoints

Seoul stocks closed sharply lower Monday as disappointment over Samsung Electronics' shareholder return plan triggered a sell-off in semiconductors. The Korean won rose against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) dipped 215.99 points, or 3.12 percent, to 6,696.96.

Trade volume was light at 264.9 million shares worth 26.1 trillion won (US$18.9 billion). Winners outnumbered losers 576 to 286.

After opening lower, the index extended losses as large-cap tech shares came under selling pressure from foreign and institutional investors, which offloaded a combined net 4.97 trillion won. Retail investors snapped up a net 3.32 trillion won worth of shares.

"The KOSPI was weighed down by disappointment over Samsung Electronics' shareholder return plan announced last week, with other Samsung affiliates losing ground," Lee Kyoung-min, an analyst from Daishin Securities, said.

On Friday, the chip giant announced a shareholder return plan worth between 90 trillion won (US$65.2 billion) and 110 trillion won. It also said the company plans to give out cash dividends of around 30 trillion won in the third quarter but noted their exact size and structure will be finalized at a board meeting in October.

Despite the massive sum involved, investors seemed to have been let down as the company failed to provide details on a possible stock buyback, the analyst added.

Investors are keeping an eye on other external factors, such as the upcoming earnings release from chip giant Nvidia and the latest economic reading from the United States.

The U.S. saw the strongest growth in its service sector in nearly two years in August, with the Purchasing Managers' Index for the month, published by S&P Global on Friday (U.S. time), rising to 56.8.

Most large-cap stocks closed lower.

Top-cap Samsung Electronics declined 8.7 percent to 257,000 won, while industry rival SK hynix shed 3.41 percent to 1,671,000 won.

Financial firm KB Financial inched down 0.73 percent to 163,100 won, top carmaker Hyundai Motor retreated 0.24 percent to 414,000 won, and nuclear power plant builder Doosan Enerbility dipped 0.41 percent to 73,000 won.

In contrast, bio firms strengthened, boosted partly by a 3.2 trillion-won licensing deal that Hanmi Pharm clinched with a U.S. Roche Group subsidiary.

The company jumped 29.96 percent, near the daily permissible limit, to 540,000 won, while other bio firms, such as Celltrion, added 0.88 percent to 194,000 won.

The Korean won was quoted at 1,382.4 won against the U.S. dollar as of 3:30 p.m., up 4.1 won from the close of the previous stock trading session.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 1.8 basis points to 3.836 percent, and the return on the benchmark five-year government bonds dipped 4.3 basis points to 4.068 percent.