South Korean stocks traded lower late Monday morning on net selling by foreign and retail investors as the market weighed the impact of the Shanghai-Hong Kong direct stock connect program.

The benchmark Korea Composite Stock Price Index (KOSPI) stood at 1,938.31 as of 11:20 a.m., down 0.35 percent or 6.83 points from Friday's close. 

The drop comes as the investors can now invest directly between the Shanghai and Hong Kong stock markets. This move could cause outflow of funds from the KOSPI that can hurt the market as a whole.

Private and foreign investors shed more shares than they bought, while institutions remained net buyers.

Tech giant Samsung Electronics, the world's largest handset maker gained 1.26 percent with global appliance manufacturer LG Electronics backtracking 0.47 percent. Memory chip giant SK hynix dropped 6.10 percent.

The country's No. 1 carmaker Hyundai Motor, which had been taking a beating after it bought an expensive piece of real estate in Seoul in September, gave up 0.85 percent, while its smaller affiliate Kia Motors edged up 0.18 percent.

Stocks of top steelmaker POSCO was up 2.21 percent with the country's largest mobile carrier SK Telecom remaining flat.

The local currency was trading at 1,095.35 won against the U.S. dollar, up 5.15 won from the previous session's close. (Yonhap)