Little faith shown in new stabilization plan
Little faith shown in new stabilization planKorean stocks closed lower yesterday as institutional selling continued and investors remained doubtful about the effectiveness of the government’s financial stabilization package, analysts said. The local currency fell against the U.S. dollar.
The benchmark Kospi declined 11.53 points, or 0.95 percent, to 1,196.1. Volume was moderate at 380 million shares worth 4.66 trillion won ($3.5 billion), with losers outpacing gainers 496 to 325.
“Although global markets gained ground on hopes of an easing of the frozen credit market, investors lacked confidence about the Seoul market due to negative domestic factors,” said Bae Sung-young, an analyst at Hyundai Securities Co.
On Sunday, the government unveiled sweeping measures aimed at providing three-year state guarantees for banks’ foreign debts worth up to $100 billion and injecting $30 billion into dollar-starved banks and companies.
“Despite the announcement of the rescue plan, some investors had doubts over its effectiveness,” Bae added.
The key stock index started stronger, mirroring a pickup in U.S. markets, but began to cut earlier gains in the morning session, dipping 2.13 percent at one point.
Most builders lost ground. Investors are awaiting the announcement of government measures to boost the slumping construction sector. Top construction firm Daewoo Engineering and Construction shed 0.85 percent to 11,650 won.
Tech blue chips also traded in negative territory. Market leader Samsung Electronics fell 0.38 percent to 519,000 won and chip giant Hynix Semiconductor lost 6.84 percent to 14,300 won.
U.S. stocks jumped Monday after Fed Chairman Ben Bernanke backed the government stimulus package. The Dow Jones industrial average soared 4.67 percent and the tech-dominated Nasdaq composite index climbed 3.43 percent.
The local currency closed at 1,320.1 won to the dollar, down 5.10 won from Monday’s close, as dollar demand remained strong by importers and foreign stock investors.
Bond prices, which move inversely to yields, rose. The return on three-year Treasuries fell 0.03 percentage point to 5 percent and the benchmark yield on five-year government bonds declined 0.04 percentage point to 5.04 percent. Yonhap
with the Korea JoongAng Daily
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