Short-selling ban helps staunch Kospi losses
Korean stocks edged down yesterday after tumbling more than 5 percent as investors were spooked by U.S. lawmakers’ rejection of a government proposal to rescue the teetering financial sector, analysts said.The benchmark Kospi fell 8.3 points, or 0.57 percent, to 1,448.06. Volume was moderate at 399.2 million shares worth 5.37 trillion won ($4.4 billion), with losers outpacing gainers 549 to 247.
“An unexpected rejection of the bailout plan severely hurt investor sentiment, sending the Kospi below the 1,400-mark at one point. But institutional buying and the financial regulator’s plans to impose a ban on short selling of stocks helped trim earlier sharp losses,” said Bae Sung-young, an analyst at Hyundai Securities.
The Kospi tumbled 5.47 percent at one point in the morning session, weighed by a selling spree by foreign investors. Offshore investors unloaded a net 126 billion won worth of local stocks on the Seoul bourse.
Blue chips lost ground across the board, with steel and machinery shares falling the most. Top steelmaker Posco declined 2.64 percent to 442,000 won and Shinhan Financial Group, the country’s No. 2 financial services company, fell 1.99 percent to 41,900 won.
But automakers reversed earlier falls on expectations that a weaker won would boost exports of cars. Top carmaker Hyundai Motor gained 1.24 percent to 73,500 won and its rival Kia Motors advanced 2.81 percent to 14,650 won.
The local currency closed at 1,207 won to the dollar, down 18.2 won from Monday’s close.
The won has lost more than 22 percent versus the dollar so far this year, putting upward pressure on already high inflation.
Korea’s currency market has been suffering from a dollar shortage, as banks and companies are rushing to the safer greenback on concerns over a financial crisis sparked by the collapse of investment giant Lehman Brothers Holdings Inc.
Bond prices, which move inversely to yields, rose sharply as weaker industrial output data raised hopes for a rate cut.
The return on three-year Treasuries fell 0.24 percentage point to 5.74 percent and the benchmark yield on five-year government bonds declined 0.26 percentage point to 5.75 percent. Yonhap
with the Korea JoongAng Daily
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