Three-year low on the Kospi as fears persist
Three-year low on the Kospi as fears persistKorean stocks plunged over 5 percent to a three-year low yesterday as investors remained jittery despite a government financial aid package.
The Kospi plummeted 61.51 points, or 5.1 percent, to a yearly low of 1,134.59, also the weakest since Sept. 6, 2005. Volume was moderate at 367.2 million shares worth 5.17 trillion won ($3.8 billion), with losers outpacing gainers 758 to 82.
“Overall sentiment was severely chilled amid worries over a global economic recession. Investors do not seem to have confidence about the government’s measures to shore up the financial markets and boost the construction sector,” said Lee Kyoung-su, an analyst at Taurus Investment and Securities. The Kospi declined below the 1,100-point mark at one point in afternoon trading, falling as much as 8.4 percent, but pared some losses later due to futures buying by foreign investors. Steep losses caused the Korea Exchange, the bourse operator, to suspend program trading at 2 p.m. for five minutes after the main index’s futures prices fell more than 5 percent. It was the ninth such emergency break this year.
“The effects of the sweeping measures may be felt after the government implements the steps, but until that, investors’ reactions to the moves may remain sluggish as sentiment was already dented,” Lee said.
Most shares traded in negative territory, led by heavy foreign selling. Foreign investors went on a selling spree of local stocks, dumping a net 363 billion won worth of stocks on the Seoul bourse. Builders lost ground despite the announcement of the government’s measures to help the country’s slumping real estate markets. Top construction firm Daewoo Engineering and Construction fell 7.3 percent.
Market leader Samsung Electronics lost 2.1 percent to 508,000 won on its decision to scrap a bid to purchase U.S. flash memory giant SanDisk Corp. due to the current financial crisis and stalled negotiations between the parties. Chip giant Hynix Semiconductor fell by the daily limit of 15 percent. Top steelmaker Posco declined 7.8 percent and top automaker Hyundai Motor plummeted 14.2 percent.
The country’s stock prices have fallen about 40 percent so far this year after reaching an all-time high of 2,064.85 in late October last year. Yonhap
with the Korea JoongAng Daily
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