South Korea's stock market has been in a relatively sharper slump compared with other regional rivals as local companies, undercut by a weak Japanese yen and a slowdown in economic growth, suffered a steep drop in their earnings, industry data showed on Sunday.

South Korea's key stock index, the KOSPI, declined 1.23 percent this year through Friday, ranking 12th among 14 regional stock indices, according to the data compiled by the Korea Exchange. 

The Shanghai Composite Index posted the biggest gain of 38.83 percent this year, surpassing the 2,900-point level for the first time since May 2011, to close at 2,937.65 points on Friday.

China's stock market has been rallying on hopes for further monetary easing to boost the world's second-largest economy.

India's benchmark S&P BSE Sensex Index, buoyed by its Prime Minister Narendra Modi's pledge to revive the economy, has rallied 34.42 percent through Friday this year, the second-best performer among Asian peers.

Modi has been working to bolster economic growth by wooing overseas investors, improving energy security, and reducing red tape.

The Stock Exchange of Thailand came in third with a 23.03 percent gain, and the Philippine Stock Exchange Composite Index (PSEi) has shot up 22.76 percent this year over the cited period, the data showed.

Japan's Nikkei Average Index has gained 10 percent so far this year on a weakening Japanese yen and the prime minister's pledge to bolster the world's third-largest economy.

"Although woes over fundamentals in China and Japan still remain, policy hopes are offsetting such concerns," said Jung Seung-jae, an analyst at Mirae Asset Securities. "In contrast, South Korea is lagging behind because of a decline in corporate earnings."

Faced with a less competitive currency, South Korean firms are struggling to maintain their edge in overseas markets. Also, weak domestic demand is hurting their profitability, analysts said.

The combined operating profit estimate for 168 listed companies was reduced by 1.4 percent for the October-December period to 27.68 trillion won (US$25.24 billion) from an estimate of 28.1 trillion won a month ago, according to the data compiled by financial information provider FnGuide.

From three months earlier, their combined operating income was cut by 11.2 percent, the data showed. (Yonhap)