Losses in financial sector drag down Kospi
Seoul stocks plunged 5.8 percent yesterday as investors dumped blue chips, spooked by escalating global financial concerns, analysts said.The benchmark Kospi plummeted 79.41 points to 1,286.69, falling to its lowest level since August 2006. Volume was heavy at 423.68 million shares worth 5 trillion won ($3.6 billion), with losers outpacing gainers, 814 to 56.
“Investor sentiment is severely deteriorated, with continued losses on Wall Street in the past few sessions causing more concerns about the credibility of financial markets,” said Lim Dong-min, an analyst at Dongbu Securities.
U.S. stocks took a hefty blow again Tuesday amid escalating fears regarding credit markets and the financial sector. The Dow Jones industrial average plummeted 5.1 percent. Australian and Hong Kong financial authorities’ recent decision to cut borrowing rates is raising prospects that the Bank of Korea will make a similar move. This is increasing investor uncertainty, Lim said, and making it more likely that they will simply pull out to avoid further losses.
Large caps lost ground across the board, with heavy machinery and steel stocks losing the most. Doosan Heavy Industries tumbled by the daily limit of 15 percent and Posco sank 5.9 percent. A measure tracking 54 financial stocks was the biggest contributor to the Kospi’s decline on concern the credit crisis will topple more financial institutions. Shinhan Financial Group, which runs Korea’s third-largest bank, lost 8.3 percent. Woori Finance Holdings, which controls the second biggest, slid 8.7 percent.
Tech exporters also lost ground. Hynix Semiconductor tumbled by the daily limit of 15 percent after Morgan Stanley cut its share-price estimate by 7.9 percent, citing the scale-down of its NAND flash chip operation and cash-flow constraints. And flat panel giant LG Display slumped 10 percent. Korean Air Lines, the nation’s biggest carrier, fell 12 percent. Asiana Airlines, the second largest, retreated 9.3 percent. Daishin Securities cut its share-price estimate on Korean Air by 22 percent and on Asiana by 11 percent, saying earnings recovery will be limited. The airlines will report their “worst” net loss for the third quarter due to valuation losses on their foreign currency debt, it said.
Yonhap, Bloomberg
with the Korea JoongAng Daily
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