Market Crash Casts Pall over Kyongui Railroad Optimism

On Monday, October 19, 1987, a deluge of sell orders poured in as soon as the New York Stock Exchange resumed operations after the weekend. Wall Street immediately fell into a panic; the stock index took a dizzying nosedive. During the course of this single day, the Dow Jones Industrial Average sustained the steepest fall in its history, plunging 508 points, or 22.6 percent. So many investors clamored to dump their holdings that the brokers could not even come up with the transaction payments. The shock wave that began in New York spread rapidly to the London, Tokyo, Singapore and Hong Kong exchanges. The panic selling triggered investor losses of 1.7 trillion dollars worldwide. It was the ＂Black Monday.＂

Black Mondays have continued to occur sporadically since then. On Monday, October 27, 1997, the Dow fell by an even greater margin, exceeding the one-day loss of the Black Monday of a decade before. August 31 of 1998 was another Black Monday.

Experts attribute such Monday falls to bearish factors which accumulate over the weekend, when markets are closed, before unleashing their force in one blast on Monday. This explanation fails, however, to fully clarify the phenomenon. The New York Stock Exchange＇s great October 24, 1929 crash that ushered in the Great Depression was a ＂Bloody Friday.＂ It was also on a Friday when the Dow sustained its worst loss by falling 617.78 points last April 14.

Korean newspapers’ front pages were splashed with huge “Black Monday” headlines the day before yesterday. The local bourse tumbled a staggering 50.64 points, sinking below the 600-point mark to close at 577.56. The free fall was touched off by the aborted sale of Daewoo Motor to Ford, combined with other bearish factors, such as soaring global oil prices and falling chip prices. Investors are increasingly uncertain about the government＇s ability to manage the restructuring crisis, and that profound anxiety is infecting the entire economy.

Precisely when the local stock markets were in a state of chaos, a groundbreaking ceremony for the restoration of the Kyongui Railway was taking place in Imjingak near the Demilitarized Zone. As colorful fireworks blazed over the Imjin River Bridge, President Kim Dae Jung repeatedly expressed the ＂deeply moving＂ significance of the ceremony. He hailed the restoration project as the realization of the Korean people＇s ardent desire to bring the divided Koreas together. I suppose I was not the only person who worried about the possibility of a second financial crisis as I looked at the depressing stock numbers carried on the front pages of major newspapers next to a picture of the groundbreaking ceremony for the reconnection of the Kyongui Railway with North Korea.

by Bae Myong-bok