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‘Developed’ status fails to rally markets

Sept 19,2008
Korean stocks closed more than 2 percent lower yesterday as spiraling market uncertainties overshadowed the economy’s designation as a “developed market” by a global equity index compiler, analysts said. The local currency plummeted against the greenback.

The benchmark Kospi plunged 32.84 points, or 2.3 percent, to 1,392.42, after falling to an intra-day low of 1,366.88. Volume was heavy at 401.4 million shares worth 5.49 trillion won ($4.79 billion), with losers outpacing gainers, 482 to 168.

“The AIG rescue plan apparently hasn’t soothed mounting anxieties on Wall Street, with its effects taking a toll on financial stocks in other regions,” said Bae Young-sung, an analyst at Hyundai Securities.

U.S. stocks dropped to a three-year low on Wednesday as the U.S. bailout of AIG failed to calm market jitters. The Dow Jones industrial average plunged 4.06 percent and the tech-dominated Nasdaq composite index nosedived 4.94 percent.

Korea’s inclusion in the Financial Times Stock Exchange (FTSE) advanced market category did not seem to play a major role in the session’s trading, as rumors of the announcement have been floating around for some time now, according to Bae.

FTSE announced earlier in the day that it will upgrade Korea’s status from the emerging market category for the first time, effective September 2009. Korea, which is classified as one of seven “advanced emerging markets,” has been on a watch list for the upgrade along with Taiwan since 2004.

Financial stocks suffered hard from market jitters. Top lender Kookmin Bank plunged 7.12 percent to 52,200 won and Woori Finance Holdings tumbled 9.91 percent to 11,950 won. Brokerage giant Mirae Asset and Securities was down 4.42 percent, ending at 93,000 won.

Tech, auto and other export-driven stocks were also dented. Hynix Semiconductor, the world’s No. 2 maker of computer-memory chips, went down 6.78 percent to 18,550 won, while its larger rival Samsung Electronics fell 1.52 percent to end at 517,000 won.

The local currency closed at 1,153.3 won to the U.S. dollar, down 37.3 won from Wednesday’s finish, as foreign investors rushed to purchase the dollar after dumping shares in the local bourse, dealers said.

Yonhap



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