(ATTN: UPDATES share price in para 5)
SEOUL/BEIJING, Jan. 10 (Yonhap) -- South Korean cosmetics makers hit 52-week lows on the local stock market Tuesday amid increased concerns over a standoff between South Korea and China over a U.S. missile defense system.
In Beijing, it has been confirmed that the Chinese authorities have recently refused to approve imports of massive amounts of South Korean cosmetics, apparently due to the rising conflict over the missile defense system called THAAD.
AmorePacific Co., the country's No. 1 cosmetics maker, and other companies dependent on the Chinese market have been under heavy selling since July last year when South Korea announced a plan to install THAAD, which has drawn strong opposition from China.
Many South Korean companies are heavily dependent on Chinese consumers and travelers as their main revenue sources.
AmorePacific closed at 293,500 won (US$247) on the Seoul bourse, down 1.68 percent from the previous session's close, marking a decline for the fifth consecutive session. The cosmetics maker hit a yearly low at one point during the session.
The price quotation compares to 441,000 won on July 7, a day before the THAAD announcement.
Kolmar Korea, Amore's smaller rival, also fell to the lowest level in a year to finish at 59,200 won, a sharp fall from the 110,000 won level in July.
China is believed to be taking economic retaliation against Seoul's decision to deploy THAAD, although Seoul and Washington claim that the missile system is aimed at countering threats from North Korea.
According to industry sources in Beijing, 19 out of 28 beauty products that failed to receive import approval from the Chinese authorities were South Korean made goods, with a total of 1,172 tons of cosmetics and related South Korean products being returned.
"Those products returned this time failed to receive approval in November last year," said a source in Beijing asking not to be named. "Concerns are growing over tightened import regulations on South Korean beauty products."
Popular South Korean entertainers have virtually been banned from performing in China since late last year as the bilateral relations soured over the deployment plan, which China insists could compromise its regional security interests.
More recently, the Chinese government also rejected South Korean airlines' plan to operate chartered flights to China ahead of the busy Chinese New Year holiday season.
"Investors are fretting over a decline in the sector's growth," said Kim Yong-koo, an analyst at Hana Financial Investment & Securities. "The cosmetics makers will rebound when there's a sharp rise in their earnings, but it is unclear (whether such a thing will happen)," the analyst said.
Han Kuk-hee, an analyst at NH Investment Securities, recently lowered the operating income growth estimate for five major cosmetics firms here to 12 percent from the previous 16 percent.
"Local cosmetics firms' earnings growth estimate can be lowered further depending on business conditions," the analyst said.
Mirroring the row between Beijing and Seoul, Chinese investors withdrew money from South Korea's stock market on a massive scale last year.
They sold a net 1.5 trillion won worth of stocks here in the first 11 months of 2016, according to the Financial Supervisory Service (FSS).
China's net buying of South Korean shares peaked at 2.2 trillion won in 2013 and declined to 2 trillion won in 2014 and 136 billion won in 2015.
Chinese investors net-sold 177 billion won worth of shares here in August, followed by the net selling of stocks worth 168 billion won in September, 206 billion won in October and 129 billion won in November.
It led to a sharp drop in the value of local stocks owned by Chinese investors. The amount fell to 8.6 trillion won as of end-November from 9.5 trillion won at the end of 2014 and 9.3 trillion won a year earlier.
31 diabetes drugs banned for suspected carcinogen substance
Summer to be hotter this year with occasional torrential rain: weather agency
Five more foreigners deported for breaching self-isolation rules
(LEAD) KBO bans ex-major leaguer Kang Jung-ho for 1 year before potential return
(LEAD) Itaewon cluster grows to 237, six stages of transmission confirmed
S. Korea to enhance quarantine measures in greater Seoul area amid spiking cases
(4th LD) New virus cases at 2-month high, tougher social distancing in line for metropolitan area
2.8 magnitude quake hits southern region
(2nd LD) Logistics center-linked virus cases snowball to 82, further spread in store
Celebrity couple Lee Dong-gun, Cho Youn-hee divorce after 3-year marriage