Seoul stocks closed slightly lower in the first trading session of 2023 on institutional selling. The Korean won declined against the US dollar.

After choppy trading, the benchmark Korea Composite Stock Price Index slid down 10.73 points, or 0.48 percent, to close at 2,225.67 points.

Trading volume was light at about 335.7 million shares worth some 5.1 trillion won ($4.01 billion). Losers outnumbered gainers 712 to 178.

After a strong start, the Kospi surrendered earlier gains as institutional investors offloaded tech shares in the afternoon.

Institutions sold a net 264.5 billion won worth of shares, while foreigners and retail investors snapped up a combined 227.9 billion won.

"No special momentum had flown into the Korean market as others in Asia and the US were closed for the New Year's holiday," analyst Lee Kyoung-min from Daishin Securities said.

"Chips and market leaders in the secondary battery sector surrendered earlier gains and added downward pressures to the main bourse," he added.

Also, weak economic data also helped sour investor sentiment.

The country's exports reached an all-time high last year but suffered the largest-ever trade deficit of $47.2 billion on high energy prices, the industry ministry said Sunday.

Market heavyweights closed mixed, while auto shares gathered ground.

Market bellwether Samsung Electronics inched up 0.36 percent to 55,500 won, and No.2 chipmaker SK hynix added 0.93 percent to 75,700 won.

Auto shares closed higher, as Washington's new guidance on the Inflation Reduction Act offered relief to investors. The US government has said Korean-made electric vehicles could be entitled for tax benefits if it is used for commercial purposes, such as leasing. Top auto maker Hyundai Motor gained 3.97 percent to 157,000 won, and sister affiliate Kia advanced 3.71 percent to 61,500 won.

Shares in cosmetic companies lost ground on the government's stricter COVID-19 measures against arrivals from China. Beauty giant Amorepacific was down 1.82 percent to 135,000 won, and LG Household & Health Care inched down 0.28 percent to 720,000 won.

The local currency closed at 1,272.6 won against the greenback, down 8.1 won from the previous session's close. (Yonhap)