Panic selling spurs fifth sidecar of the year

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Panic selling spurs fifth sidecar of the year

Seoul stocks tumbled 4.1 percent yesterday on worries that global moves to cut interest rates would not be enough to ward off a global economic recession, analysts said.

The benchmark Kospi plummeted 53.42 points to 1,241.47. Volume was moderate at 449 million shares worth 6.2 trillion won ($4.5 billion), with losers outpacing gainers 758 to 104.

“The local stock market showed jitters, led by panic selling. But the rebound of the won’s value and a set of measures to calm the stock market helped the Kospi trim earlier losses,” said Bae Sung-young, an analyst at Hyundai Securities Co.

Mirroring heavy losses of the U.S. markets, the Kospi tumbled as much as 9 percent at one point, falling below the 1,200-point level.

Steep losses caused the Korea Exchange, the bourse operator, to suspend program trading at 9:06 a.m for five minutes after the main index’s futures prices fell more than 5 percent. The move to suspend trading was the fifth time that the exchange has activated a so-called sidecar this year.

But the key stock index cut earlier losses in afternoon trading mainly because the local currency bounced back against the greenback.

Most shares traded in negative territory. Market leader Samsung Electronics declined 3.7 percent to 521,000 won and top steelmaker Posco fell 3.2 percent.

Financial shares took a beating amid the deepening global financial rout. Shares of KB Financial Group, Kookmin Bank’s holding company, shed 2.4 percent on its first day of trading on the main bourse. KB Financial tumbled almost 15 percent at one point.

Industrial Bank of Korea tumbled 9.5 percent. Korea Exchange Bank, controlled by U.S. private equity fund Lone Star, declined 7 percent. Korea Electric Power plunged 13.6 percent and top automaker Hyundai Motor shed 4.1 percent.

Daewoo Engineering and Construction, the nation’s largest builder, slid 3.3 percent. Kumho Industrial, another builder, fell 3.3 percent. Morgan Stanley cut its recommendation on Daewoo and Kumho to “underweight’’ from “equal weight’’ in a report, saying a rebound in the housing industry will come in mid-2009 “at the earliest.’’

Yonhap, Bloomberg
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