Analysts projected earnings to drop at major listed firms on the KOSPI as export conditions deteriorate with still-elevated oil prices and eurozone output contracting.

FnGuide, the most widely accessed financial information provider here, lowered the earnings forecasts this week for 108 companies listed on the KOSPI to 81.3 trillion won ($72 billion), down 7.98 percent from the 88.3 trillion won it made in September.

The downward adjustment came as the index climbed up almost 400 points from the dip to the 1,600 level reached in September, meaning analysts lowered growth projection at many even as they watched the index rising.

“The Iran risk may deteriorate over the next few weeks and a lot of bonds issued by European countries mature in March and April, so these could leave major economies stuck in low gear and complicate conditions for Korean exporters,” Lim Hee-jung, a research fellow at Hyundai Research Institute said.
Lim added that crude prices hovering at $105 a barrel and a weak Japanese yen could hurt Korean exporters. The higher oil prices are in part attributed to the tension with Iran as they fight against U.S.-led sanctions aimed at stopping Tehran from acquiring a nuclear weapon.

The Japanese yen fell 3.5 percent against the U.S. dollar in the calendar year to date, lifting exporter equities in Tokyo on hopes that Japanese product would be seen more competitive in the global market.

Vice Finance Minister Shin Je-yoon on Wednesday said the economy could bottom out in March or April as external risks is projected to peak then.

Kwon Soon-woo at Samsung Economic Research Institute points to the hard landing of the Chinese economy, Korea’s biggest trading partner.

“The downside impact to the Korean economy could be manageable if the Chinese economy achieves at least 8 percent expansion this year. If the figure falls below that, it would sharply contract output here,” Kwon said. China’s manufacturing sector contracted in February for the fourth consecutive month as export orders dropped from Europe and the U.S.

By Cynthia J. Kim (cynthiak@heraldcorp.com)