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Losses on Wall Street carry over to Korea

Dec 03,2008

Seoul stocks closed 3.4 percent lower yesterday, tracking overnight U.S. losses triggered by reports on the American economy’s recession, analysts said.

The benchmark Kospi fell 35.42 points to 1,023.20. Volume was moderate at 414.8 million shares worth 4 trillion won ($3.2 billion) with losers outnumbering gainers 711 to 136.

“Steep falls on Wall Street rattled the Seoul bourse in early trading, but the local market managed to cut losses to some extent as investors picked up shares to benefit from year-end dividends,” said Kwak Jung-bo, an analyst at Hana Daetoo Securities.

Wall Street tumbled sharply on Monday as the National Bureau of Economic Research, a nonprofit group which classifies U.S. business cycles, and a slew of economic data declared the world’s largest economy has been in recession since December last year while the chairman of the Federal Reserve, Ben Bernanke, acknowledged that the economy remained under considerable strain.

The Dow Jones industrial average tumbled 7.7 percent, recording its second-worst daily loss this year.

On the Seoul market, tech shares were hit hardest as investors bet the global economic downturn will crimp demand for consumer gadgets. Market heavyweight Samsung Electronics lost 4.7 percent to end at 454,000 won and its smaller rival LG Electronics lost 3.9 percent.

Automakers extended losses for a second day after a report on Monday showed a drop in domestic car sales last month amid consumer spending reductions. Industry leader Hyundai Motor fell 5.7 percent, with its affiliate Kia Motors plummeting 7.5 percent. Goldman Sachs said it remains “negative” on the Korean automakers as the slowdown in sales has just begun to be felt in the domestic market.

Steelmakers were also weak. Posco, the world’s fourth-largest, dropped 4.7 percent and Hyundai Steel, the second-largest, sank 5.6 percent. Separately, ArcelorMittal, the world’s biggest steelmaker, plans to cut 1,400 support jobs at its French operations.

Some financial shares, however, managed to finish in positive terrain on massive buying among foreign investors. Mirae Asset Securities climbed 0.8 percent and Shinhan Financial Group gained 1.7 percent. Yonhap, Bloomberg





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