Tablets Take Bite Out of Korean Tech Stocks

Not everybody is thrilled with the rise of the tablet.

Tech stocks in South Korea took a hit Tuesday following a report that products like Apple Inc.’s iPad could eat into demand for personal computers.

Today we have Korea Tech stocks lower on concerns that falling DRAM prices to hit their bottom lines. Hynix Semiconductor was down 4.2% at 23,750 South Korean won ($20.59) concerns ongoing fall in prices for DRAM chips – a common PC component — will continue to weigh on its fourth-quarter earnings. “Some in the market worry that the Hynix may swing to an operating loss in the fourth quarter due to the falling DRAM chip prices of late, but I think the market is overreacting,” says Meritz Securities analyst Lee Sun-tae. “The chip prices will soon hit bottom while Samsung and Hynix will stay solid as they both are also strong in the NAND flash business as well as due to strong demand for mobile DRAM chips.”

Overall, foreigners tiptoed out of the South Korean market Tuesday amid lingering North Korea tensions. “Negative sentiment seems to have somewhat eased among institutions as North Korea has stayed relatively quiet so far, but eased worries can’t replace fresh momentum to lift the overall index further,” says Solomon Securities analyst Kang Hyun-gie. South Korea’s Kospi was at 0.3% late in trading, with foreigners selling net 27.29 billion won in stock.

–Jung-Ah Lee and Jieun Shin

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Pyongyang Rhetoric Rattles South Korean Market

By Jieun Shin and Jung-Ah Lee

North Korea’s inflammatory rhetoric usually leaves markets unmoved, but the decision to add artillery fire this week put a new spin on its words. So when the official Korean Central News Agency, as quoted by the Yonhap news agency, said Friday that Pyongyang ?is “ready to annihilate” South Korea’s strongholds if the North’s sovereignty is even slightly violated—its standard line when the South holds military exercises—it helped send the Seoul index down 1.3% on the day. The U.S. and South Korea will hold a scheduled joint drill starting this weekend.

“The bearish trend could continue through early next week,” due to tense situation on Korean peninsula, says Hyundai Securities analyst Bae Sung-young. The weakness was broad, with LG Electronics down 0.9%, Samsung Electronics down 1%, Hyundai Motor down 1.4% and Hynix Semiconductor down 2.2%.

Meanwhile the U.S. dollar took off against the won. “Shortly after the North’s comment, offshore dollar-buying demand spiked,” says a local bank dealer. The dollar hit an intraday high of 1,164.5 won before paring gains on exporter selling; it was recently at 1,155.45, from 1,142.20 Thursday.

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