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Shares in South Korea's Hyundai Heavy Industries fell by more than a quarter on Wednesday after investors reacted badly to plans to raise fresh funds.

Hyundai, the world's top shipbuilder by sales, aims to raise about $1.2bn (£895m) by issuing new shares, diluting the value of existing stakes.

It said the cash would mainly be used to bolster its ailing finances.

Hyundai has struggled during an industry-wide slump brought on by slowing global demand and overcapacity.

The crisis, which has been exacerbated by competition from China, led to South Korea's shipping giant Hanjin filing for bankruptcy last year.

Earlier this week, Hyundai issued grim predictions for its profits in both 2017 and 2018.

It forecast an operating profit of 46.9bn won ($43.6m/£32.6m) this year - down by more than two-thirds on 2016's figure.

On Wednesday the firm said it also planned to list its refining unit, Hyundai Oilbank, on a local stock market next year.

The announcements pushed shares down 29% in Seoul.