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Kospi correction brewing: experts

Nov 13,2007
Employees at Korea Exchange watch a steep decline in the benchmark Kospi index yesterday at the company’s headquarters in Yeouido, central Seoul. [YONHAP]
The Korean stock market began the week with a huge fall yesterday touched off mainly by a plunge on Wall Street last week. The benchmark Kospi shed 67.05 points, or 3.4 percent, to 1,923.42 points. It was the fifth-largest percentage drop this year.
Many market experts in Korea see no imminent breakthrough in the current turbulence in the world economy. High-flying oil prices, a slowing U.S. market and concern over the overheating Chinese stock market are all unpredictable, they say.
They warned the local index would likely remain steady or go even lower over the course of a short adjustment period.
“The U.S. economy and other stumbling factors won’t likely be settled soon, so the Kospi will go through a cooling-off for a while before stabilizing above 2,000 points,” said Kim Joo-hyeong, an analyst at Tongyang Investment and Securities. On Friday, the U.S. Dow Jones industrial average fell more than 220 points after major banks warned of further losses.
Kim Hak-kyun, an analyst at Korea Investment and Securities, also advised caution.
“The steep increase in the price of natural resources is causing concern about a potential drop in profits at [Korean] companies,” Kim said. “An adjustment period will be needed, during which investors should check how negative factors are affecting real economies in markets around the globe.”
The local situation is not good, either, raising the necessity of discreet investment, according to experts.
“The upward momentum of the Kospi’s leading shares is ending, and badly performing shares, such as IT companies, automakers and banks, are still struggling,” said Oh Hyun-seok, an analyst at Samsung Securities.
Min Sang-il, a researcher at Hanwha Securities, even suggested in a report that local investors decrease stocks in their portfolios.


By Moon Gwang-lip Staff Writer [joe@joongang.co.kr]



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