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Kospi falls hard on renewed global worries

July 30,2008
Korean stocks plunged almost 2 percent yesterday on renewed worries over a global credit crunch and gains in oil prices.

The benchmark Kospi declined 31.09 points, or 1.95 percent, to 1,567.20. Volume was thin at 258.2 million shares worth 4.1 trillion won ($4.1 billion), with losers outpacing gainers, 672 to 148.

“The Seoul market was heavily dented by renewed concerns over a credit squeeze and oil prices. These are not new factors weighing on the market, but the process of resolving these problems is not smooth,” said Rhoo Yong-seok, an analyst at Hyundai Securities.

A set of U.S. and Korean macroeconomic data, due out later this week, will serve as a gauge of the severity of a global economic downturn, Rhoo said.

U.S. stocks closed sharply lower Monday on investors’ worries over the financial sector. The Dow Jones industrial average fell 2.11 percent, and the tech-dominated Nasdaq composite index declined 2 percent.

Merrill Lynch said Monday it will book $5.7 billion in write-downs in the third quarter, and the International Monetary Fund said the end of the U.S. housing market slump is “not visible,” deepening worries over a credit crunch. Prices of U.S. oil futures rose 1.2 percent to $124.73 per barrel.

Most shares traded in negative territory, led by tech and financial shares. Foreign investors sold a net 143 billion won worth of local stocks.

Tech blue chips were dented on worries over their future earnings outlook. Market leader Samsung Electronics declined 2.9 percent to 544,000 won, and consumer electronics giant LG Electronics plunged 7.3 percent.

Financial shares declined, mirroring falls in their peers in the U.S. market. Top lender Kookmin Bank fell 2.6 percent, and No. 2 financial services company Shinhan Financial Group lost 1.9 percent.

Top retailer Lotte Shopping declined 4.1 percent on its weaker second-quarter earnings. The company posted a net profit of 168 billion won in the April-June period, down 6.8 percent from a year ago because of decreased sales.

The local currency closed at 1,008.8 won against the dollar, down 2.8 won from Monday’s close. Yonhap



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