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Korean stocks nosedive on U.S. stocks’ decline

June 13,2008
Korean stocks plunged over 2 percent yesterday on a massive foreign sell-off, prompted by steep overnight U.S. stock losses and rising concerns over mounting inflationary pressure and the global economy, analysts said.

The benchmark Korea Composite Stock Price Index fell 42.31 points, or 2.37 percent, to 1,739.36, the lowest in more than two months. Volume was moderate at 374.74 million shares worth 6.7 trillion won ($6.48 billion), with losers outpacing gainers 562 to 231.

“Investor sentiment went fragile on overnight falls in U.S. and downswings in Asian stocks, with expiration of options adding to market uncertainty,” said Park Seok-hyun, an analyst at Eugene Investment and Securities. “Foreigners led the market pullback amid mounting jitters over the global economy.”

U.S. stocks tumbled Wednesday as oil prices rebounded to $136.38 a barrel on the New York Mercantile Exchange, stoking fears that inflation will limit consumption. The Dow Jones industrial average fell 1.68 percent and the tech-heavy Nasdaq composite index plunged 2.24 percent.

Foreign investors sold around 968 billion won more than they bought, while institutions and retailers picked up shares on bargain hunting.

Major blue-chip shares dropped substantially, with shipyard and steel shares among the sharpest decliners. Korea’s largest shipbuilder, Hyundai Heavy Industries, plunged 4.7 percent, while smaller Samsung Heavy Industries fell 5.2 percent. The country’s No. 1 steelmaker, Posco, dived 6.0 percent.

The world’s largest memory chipmaker, Samsung Electronics, shed 2.6 percent to 663,000 won while Hynix Semiconductor, the second largest, plunged 6.3 percent.

The Semiconductor Industry Association cut its forecast for global semiconductor sales growth this year to 4.3 percent from 7.7 percent after prices of dynamic random access memory chips declined, the U.S.-based group said Tuesday.

Korea Electric Power Corp. declined 2.6 percent. Citigroup Inc. cut its price estimate to 31,000 won, from 33,000 won, in a report. A possible increase in electricity rates in the second half probably won’t be enough to boost profitability, wrote Pierre Lau, an analyst. Yonhap, Bloomberg




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