[THE INVESTOR] South Korean stocks retreated on Oct. 7, as investors took a step back to observe US Federal Reserve’s decision on interest rate hike.

The Korean won fell against the greenback.

The benchmark KOSPI shed 11.5 points, or 0.56 percent, to close at 2,053.8. Trade volume was moderate at 417.85 million shares worth 5.14 trillion won (US$4.61 billion), with decliners far beating gainers 611 to 199.

Investors remained cautious ahead of US nonfarm payroll report due later in the day, which analysts expect will show a solid gain of 176,000 jobs last month. Market watchers expect robust data will raise the chance of an interest rate hike within this year.

Foreigners and retail investors each bought a net 37.85 billion won and 196.22 billion won, while institutions sold a net 236.15 billion won.

Most market heavyweights were down, while Samsung affiliates were bullish after US hedge fund Elliott Management on Thursday urged Samsung Electronics to streamline its corporate structure and increase returns to shareholders.

Samsung Electronics rose 0.89 percent to close at a record high of 1,706,000 won after posting upbeat third-quarter earnings guidance on its memory chip and display businesses despite a global recall of its Galaxy Note 7 smartphones.

Samsung C&T, a construction arm that serves as the group’s de-facto holding firm, surged 0.91 percent to 154,500 won on hopes that the US activist fund’s demand could raise shareholder value of South Korea’s largest conglomerate.

In contrast, cosmetics slumped as prospect of weak earnings dented their shares.

No. 1 AmorePacific dropped 5.64 percent to 359,500 won and its smaller rival LG Household & Health Care tumbled 5.41 percent to 891,000 won.

LG Electronics, the nation’s second-largest electronics maker, retreated 0.41 percent to 48,400 won after it released a weak third-quarter earnings estimate due to its sluggish handset business.

The local currency closed at 1,115.50 won against the US dollar, down 3.30 won from the previous session.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 0.5 basis point to 1.326 percent and the return on the benchmark five-year government bond added 0.2 basis point to 1.343 percent.

(theinvestor@heraldcorp.com)