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Global worries drag down local markets

July 03,2008
Seoul stocks tumbled yesterday as investors went on a selling spree on concerns that sky-high oil prices and financial woes in the U.S. could derail the global economy, analysts said.

The benchmark Kospi fell 42.86 points, or 2.6 percent to 1,623.6, the lowest in more than three months. Volume was moderate at 330.3 million shares worth 5.2 trillion won ($5.1 billion), with losers outpacing gainers, 742 to 103.

“There was at lot of panic selling across the board, with investors dumping shares including shipyard and construction companies,” said Park Seok-hyun, an analyst at Eugene Investment and Securities. “Especially, foreign investors seemed to trim their holdings here as part of efforts to seek safer investment assets away from emerging markets.”

Most blue chips fell sharply, with airline, shipping and other oil-sensitive shares leading the declines.

Korean Air Lines, Korea’s largest carrier, dropped 8.3 percent, the lowest since April 27, 2007 after Korea Investment and Securities said the carrier will likely post a quarterly operating loss because of fuel costs.

Asiana Airlines fell 4.8 percent.

“The surge in oil prices in such a short period may cause Korean Air to post a quarterly operating loss for the first time since the first quarter of 2003, when demand was hit by SARS,” Yun Hee-do, an analyst at Korea Investment, said in the report.

Shipping and machinery companies weighed on the market. Industry leader Hanjin Shipping lost 3.5 percent, while top power equipment manufacturer Doosan Heavy Industries and Construction fell 7.5 percent.

The nation’s top exporter, Samsung Electronics, shed 0.9 percent on speculation a slowing global economy will reduce demand for its televisions and mobile phones.

Steelmakers and builders also closed down sharply. Industry leader Posco lost 3.9 percent, and smaller Hyundai Steel plunged 7 percent.

Top builder Daewoo Engineering and Construction lost 3.6 percent.

Telecom issues, however, bucked the market downswings. Leading mobile carrier SK Telecom inched up 0.5 percent, while smaller KTF rose 0.1 percent.

Yonhap, Bloomberg



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