Samsung shares drop as arrest warrant sought for Samsung head

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Samsung shares dropped on Monday after news that a South Korean special prosecutor will seek an arrest warrant for Samsung Group chief Jay Y. Lee for charges related to an influence-peddling scandal that involves President Park Geun-hye.

Shares for units of South Korea's largest conglomerate were down on Monday: the heavily-weighted Samsung Electronics was down 2.14 percent, Samsung Heavy Industries off 0.95 percent, Samsung Engineering plunged 3.43 percent and Samsung C&T lower by 0.78 percent.

The special prosecutors office accused Lee of paying bribes to a close aide of President Park's Choi Soon-sil, totaling 43 billion won ($36.42 million).

Prosecutors had been investigating whether Samsung's support for Choi was connected to a National Pension Service 2015 decision to support the controversial Samsung C&T-Cheil merger. The National Pension Service's chairman Moon Hyung-pyo was also indicted on charges of abuse of power and giving false testimony.

Samsung Electronics, the smartphone giant, is also set to announce the results of its investigation on what caused some of its Galaxy Note 7 handsets to catch fire on Jan. 23, according to Yonhap News Agency. Samsung discontinued the Note 7 series last October, only a few months after its August launch.

The benchmark Kospi traded down 0.61 percent or 12.6 points to close at 2,064.17.

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Meanwhile, Asian markets were tested on Monday as the British pound fell more than 1 percent on fears of a hard Brexit from the European Union, while shares of Japanese airbag maker Takata tumbled more than 8 percent.

The British pound tumbled from levels above $1.2176 to about $1.2017 on Monday during Asian hours. The euro gained against the pound, climbing to 0.8831, from levels near 0.8743.

The currency's decline followed media reports that suggested Prime Minister Theresa May's government was prepared to make a "clean and hard" exit from the European Union, ahead of her speech Tuesday.

Traders expect volatility in the currency markets to persist ahead of May's speech.

"The market is now positioning for some fairly punchy rhetoric from Theresa May and this idea of "hard Brexit" and a clean break from the single market seems increasingly likely, with the government making a bid to gain full control over immigration," said Chris Weston, chief market strategist at spreadbettor IG, in a note.

Weston added the pound was now "an out-and-out political currency" with high volatility.

Over in Japan, Takata shares were down 10.56 percent, after the airbag maker reached a settlement agreement on Friday with the U.S. Department of Justice on an ongoing investigation.

Takata said it agreed to plead guilty to one count of wire fraud for falsifying testing data and reports that were provided to automakers and would pay a criminal fine of $25 million.

The company added it will establish a $125 million restitution fund for individuals affected by its faulty airbags and another $850 million restitution fund for automakers who received falsified testing data.

The broader Nikkei Stock Average was off 1 percent or 192 points at 19,095.2 as the yen strengthened, with major export stocks under pressure.

The yen fetched about 113.78 versus the dollar at 3:00 pm HK/SIN time, compared to levels above 116 in the previous week.

Shares of automakers Toyota plunged 0.8 percent, Nissan was off by 0.6 percent, Honda was nearly flat and electronics giant Sony fell 0.99 percent.

Nintendo shares extended Friday's loss of more than 5 percent to trade down 2.32 percent. The storied Japanese gaming giant released details about its upcoming next-generation gaming console - Nintendo Switch - last week, but investors were unimpressed by the higher-than-expected pricing.

Chinese markets also came under heavy pressure. The Shanghai composite slid 0.32 percent or 1 points to close at 3,102.7 but the Shenzhen fell 3.62 percent or 69.6 points to close at 1,851.4. Hong Kong's Hang Seng index declined 0.85 percent by mid-afternoon.

At a meeting last Friday to gather opinions from experts and entrepreneurs for the draft of an annual government report, Chinese Premier Li Keqiang said China's economy is set to face more pressure and problems this year amid changes in global politics and economic challenges, Reuters reported.

In other news, LeEco's Shenzhen-listed unit Leshi Informations fell 1.12 percent, paring back earlier gains of more than percent on news that property developer Sunac China Holdings would invest 6.04 billion yuan ($87.6 million) in Leshi, by acquiring an 8.61 percent stake. Shares of the Hong Kong-listed Sunac was down 8.09 percent.

Australian shares were up, with the ASX 200 finished 0.48 percent or 27.3 points at 5,748.4. The materials sector advanced 1.39 percent, as major resources producers gained more than 1 percent each, while the energy sector fell 0.31 percent.

Shares of Rio Tinto was up 1.82 percent, Fortescue climbed 2.92 percent and BHP Billiton advanced 1.67 percent.

Spot gold, often seen as a safe haven asset, rose 0.73 percent to $1,206.00 per ounce, compared to prices that ranged from $1,173.46 to $1,195.70 last week.

In the broader currency market, the dollar traded at 101.4 against a basket of currencies, while the Australian dollar traded at $0.748.

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