Banking shares fall on subprime worries
Korean stocks fell a fourth day, led by Kookmin Bank, after Goldman Sachs told investors to sell shares of Citigroup, renewing concern further losses tied to subprime mortgage investments will be disclosed.The Kospi index fell 21.23 points, or 1.1 percent to 1,872.24.
The Kosdaq index lost 11.3 points, or 1.5 percent to 739.47.
“Foreign investors are continually selling banking shares, and recently regulators strengthened requirements for provisions on corporate loans, eroding profits,” Kim Jun-ki at Hanwha Investment Trust Management said. “Banks don’t look attractive at all.”
Kookmin, Korea’s largest lender, fell 4.6 percent, while Shinhan Financial Group dropped 2.5 percent. Woori Finance Holdings declined 3.6 percent.
The rating on shares of Citigroup, the biggest U.S. bank, was lowered to “sell” by Goldman on the view the lender’s writedowns of collateralized debt obligations may total $15 billion over the next two quarters. That would be in addition to the $11 billion in writedowns already announced this month.
U.S. stock indexes dropped to three-month lows yesterday with the Standard & Poor’s 500 Index sliding 1.8 percent and the Dow Jones industrial average dropping 1.7 percent.
LG Electronics, Korea’s second-largest electronics appliance maker, fell 3.3 percent. Samsung Electro-Mechanics, an electronic parts manufacturer, shed 3.4 percent.
Hanwha Chemical, a Korean chemical manufacturer, slid 1 percent. The company acquired Azdel, a U.S. automobile parts plant, through an unlisted subsidiary for $62 million, according to Azdel’s Web site. Ssangyong Motor, the Korean unit of China’s biggest automaker, dropped 0.6 percent. The automaker may cut production of its vehicles to reduce inventories and is discussing the prospect with the union, Kevin Lee, a company spokesman, said by phone yesterday. Bloomberg
with the Korea JoongAng Daily
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