Market mauled for 6th straight day

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Market mauled for 6th straight day

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Global uncertainty continued to rock local financial markets yesterday. Top left: A dealer monitors stock prices at a Korea Exchange Bank in central Seoul. Top right: GNP lawmaker Kim Sung-sik monitors the Kospi movement on his smartphone during a meeting. Bottom left: Finance Minister Bahk Jae-wan reads reports at a cabinet meeting. Bottom right: Gold, displayed at the Korea Gold Exchange yesterday, rose to record prices. [YONHAP]

Korean stocks suffered another heart-stopping rout yesterday, at one point falling a shade under 10 percent in midday trading.

Domestic and international efforts failed to reassure panic-stricken investors, whose indiscriminate selling pushed the Kospi below the psychologically important 1,700 barrier at one point. It is the first time in three years that trading was halted for five minutes for the second straight day.

The sell-off was felt across Asia, with Hong Kong’s Hang Seng Index suffering the biggest fall of 5.66 percent. Japan’s Nikkei 225 fell below the 9,000 mark to close at 8,944.48, 1.68 percent down from Monday.

It’s the first time since before 1980 that the market dropped 2 percent for six consecutive trading days.

When fears of a double-dip recession were the impetus of last week’s selling, Friday evening’s decision by S&P to downgrade the U.S. credit rating infused fear into the already shaky market.

However, analysts said that investor panic is overruling any logical response to current economic fundamentals.

Authorities the world over have started to act. Government agencies and CEOs of local brokerages have begun releasing some measures to soothe the panic. Also, investors are looking to the U.S. Federal Open Market Committee (FOMC) meeting on Aug. 9 U.S. time for a reprieve.

It was a harrowing day for Korean markets.

After opening at 1,807.88, the Kospi immediately plunged below the 1,800 mark and activated a sidecar at 9:19 a.m., then plummeted below the 1,700 mark midday - down almost 10 percent - as panicked investors continued to unload shares. A big rebound eventually brought the market to 1,801.35 points, 68.10 points or 3.64 percent lower than Monday’s close.

The smaller, tech-laden Kosdaq declined below the 450 mark during trading, breaking through the bottom of the 450 to 550 range the index had remained in for two years. Trading was twice halted due to steep declines, once at 9:39 a.m. then again at 10:41 a.m. After falling to 404.55 points at 11:21 p.m., the market closed at 432.88 points, a daily drop of 6.44 percent.

This comes on the heels of pronounced drops in European and U.S. stock markets on Monday. The Euro Stoxx 50 Index of euro zone blue-chip stocks fell to a two-year low, swallowing early rallies on news that the ECB would buy Italian and Spanish bonds. The S&P 500 retreated 6.66 percent to 1,119.46, while the Dow Jones Industrial Average shed 634.76 points, or 5.55 percent, to 10,809.85 on Monday.

The Kospi gets a drubbing

Since the stock rout began last Tuesday, local analysts have been at a loss to explain what has been behind the selling.

“Korean companies’ performance and credit quality are not problematic. I believe chances of a further steep decline in the benchmark index are limited,” Kim Hee-seok,the investment strategy division head of the nation’s biggest investor, the National Pension Service (NPS), said yesterday according to Bloomberg.

However, the Kospi has been volatile time and again, plunging a total of 370.96 points since the market closed on Aug. 1 and shedding some 208.99 trillion won ($192 billion) in market capitalization in six days.

The primary reason is that Korea’s economy remains hitched to the U.S. economy, which is currently in bad shape. According to the Bank of Korea yesterday, it was found that when U.S. economic growth falls 1 percentage point, Korea’s economic growth drops 0.4 percentage points.

But analysts said that even taking such factors into account, the Kospi’s plunge is unprecedentedly steep - driven by investor panic rather than sound analysis of economic data.

“It’s the first time since 1980 that more than an average of 2 percent drop every day for five trading days, let alone six,” said Eric Kim, an economist at Woori Investment & Securities.

This is beyond the pale of Korean economic fundamentals or even current negative U.S. economic indexes, and is largely due to investors being psychologically spooked, experts explained.

“A sort of psychological tipping point has been crossed,” said Kim. “The problem is how do you dispel investor panic when both worries about global economic recession and doubts about the stability of the financial system are increasing?”

On this point, government officials agree.

“Korean markets have a tendency to be hypersensitive [to global stimulus],” Hong Young-man, standing commissioner of the Securities and Futures Commission of the FSC, explained.

“Foreign investors hold a large share of a market that is very liquid, so a pattern of foreign sell-offs followed by Korean retail investors dumping shares emerges. In order to dampen such over-the-top market reaction, reassuring investors will be paramount.”

In fact, foreign investors sold off 1.17 trillion won in Kospi shares yesterday, driving the index down.

Because foreigners hold more than 30 percent of market capitalization, such a selling streak also means a drop in the value of the won as foreign investors sell stocks to move into safe haven currencies such as the dollar, the yen and the Swiss franc.

The won reached 1088.10 against the dollar yesterday, down compared to the day before, despite Korean government intervention in foreign exchange markets.

Countermeasures on the way

Meanwhile, Financial Services Commission Chairman Kim Seok-dong held an emergency meeting with heads of brokerages, asset management companies and other capital market leaders yesterday, followed by a meeting of CEOs of brokerages and asset managers hosted by the Korea Financial Investment Association.

In particular, government officials and the capital market industry discussed measures such as giving tax breaks to mutual funds and setting up a “market stability fund” fed into by the KRX and other institutions to invest in local stocks and bonds.

The FSC further decided to temporarily ban short selling as well as ease the upper limits on a single investors’ stock purchase volume for both the Kospi and Kosdaq markets for the next three months starting from today, while stepping up monitoring of online trading as well as asking financial companies to ease their internal stop-loss rules.

Short selling, the practice of selling stocks that an investor does not own, was barred during the 2008 global financial crisis, then reinstituted for nonfinancial stocks in June 2009 as the market returned to normal.

Stop-loss, which is an internal mechanism to sell a stock when it reaches a certain price to cut losses within larger investors such as banks or insurers, has been credited with driving the accelerated market drops, as many larger investors are forced to automatically sell large quantities of stocks upon reaching preset stop-loss limits that can be as much as a 10 percent drop in share value from market open.

Meanwhile, pension fund managers such as the NPS and the Korea Teachers Pension plan to substantially expand their domestic stock investments to buoy falling stock markets. In particular, the NPS, the fourth-largest pension manager in the world, decided to sink 18 percent of its 341 trillion won in investment funds by the end of this year, an increase from 17.77 percent as of the end of June.

The BOK also released a statement vowing to step up monitoring of foreign investment in Korean stocks as well as foreign currency reserves of domestic financial institutions. The central bank will also conduct open market operations to fortify banks’ payment reserves, providing foreign currency liquidity when needed.

Although forecasts are bleak on what could turn investors’ psychological panic around if cooperation by the Group of 7 and Group of 20 fail to do the trick, experts will look to the U.S. Federal Open Market Committee meeting on Aug. 9 (U.S. time) as a possible remedy.

Korean government officials have harkened back to previous market crises in an attempt to lift investor spirits.

“We saw a similar situation with the local markets back in 2008, but persevered and bounced back,” said Hong, the FSC standing commissioner.

“We can do it again.”

By Lee Jung-yoon [joyce@joongang.co.kr]

한글 관련 기사 [연합뉴스]

외국인 6일째 매도 공세에 코스피 '폭삭'

매도규모 줄어 저가매수 급전환 조짐 감지
자문형랩 로스컷 물량도 주가 급락에 가세

외국인이 6거래일째 '팔자' 행진을 벌인 탓에 8일 코스피가 장중 1,800선까지 폭삭 주저앉았다.

그러나 외국인은 장 후반에 순매도 폭을 크게 줄여 저가매수를 시작한 것 아니냐는 관측을 낳기도 했다. 시장 공포를 계속 키워왔던 외국인이 일말의 희망 조짐을 보인 것이다.

외국인은 이날 685억원의 순매도를 기록하며 장을 마감했다. 외국인 주도의 매물이 봇물 터지듯이 쏟아지면서 코스피가 1,869.45로 밀렸다. 장중 1,800선을 건드리기도 했다. 지난 2일부터 외국인의 누적 순매도 규모는 2조원이 넘는다.

외국인은 개장과 동시에 '팔자'에 나서 오후 1시 무렵에는 순매도 규모를 2천300억원 이상까지 확대했다.

이후 외국인은 매도 폭을 급격히 줄여 장 마감 때는 순매도 규모가 600억원대로 감소했다.

외국인 순매도는 동시호가를 거치며 약 800억원으로 늘었지만 지난 2∼5일 하루 평균 5천억원인 것을 고려하면 매도세가 크게 둔화한 셈이다.

외국인이 저가매수에 나섰을 것이라는 신호로 해석되는 대목이다.

대우증권 이승우 연구원은 "코스피가 장중 1,800선까지 터치했으니 외국인이 저가 매수한 것은 당연한 현상이다. 그러나 시장이 워낙 예측할 수 없는 상황이라 외국인 매매 추세를 예상하기는 어렵다. 다만, 외국인이 '셀 코리아(Sell Korea)' 기조로 돌아서지는 않을 것으로 본다"고 분석했다.

외국인이 추세적인 매수세를 나타내려면 세계 경기침체 우려가 어느 정도는 걷혀야 할 것으로 보인다.

대신증권 오승훈 연구원은 "미국 경제가 이중침체(더블딥)에 빠질 것이라는 우려가 해소되기 전에는 외국인이 매수세로 돌아서기 어려울 것으로 본다"고 말했다.

개인은 이날도 패닉 분위기 속에서 투매 양상을 보였다.

장 초반만 해도 매수 우위를 보이던 개인이 오전 장중 매도세로 가닥을 잡았다. 이후 대량의 매물을 쏟아내며 장 마감과 동시호가를 거쳐 순매도 규모를 7천억원 이상을 늘렸다.

개인 순매도 규모가 커진 것은 최근 자문형 랩 어카운트 등에서 로스컷(손절매) 물량이 쏟아졌기 때문이라는 지적이 있다.

그러나 개인투자자들이 비이성적인 투매에 동참하는 것은 위험하다는게 시장의 중론이다.

솔로몬투자증권 이종우 리서치센터장은 "시장이 조만간 안정을 되찾을 것으로 보이는 만큼 비관적인 분위기에 휩쓸려 매도하는 것은 바람직하지 않다"고 조언했다.

기관은 이틀째 저가매수에 나서 6천억원 이상의 순매수를 기록했다.

연기금은 4천억원 넘게 순매수하며 폭락장에서 '구원투수' 노릇을 했다. 국가ㆍ지자체도 1천500억원 가까이 순매수했다.

기관 매수세는 프로그램 매매에서도 강하게 나타났다.

바스켓(묶음)으로 현물을 매매하는 프로그램 비차익거래에서 기관은 4천356억원을 순매수했다. 이에 힘입어 프로그램 비차익거래는 5천263억원의 매수 우위를 보였으며 차익거래를 합한 프로그램 매매는 모두 5천263억원의 순매수를 기록했다.

삼성증권 전균 연구원은 "프로그램 비차익거래에서 기관의 저가매수 현상이 뚜렷이 나타난다. 다만, 시장 변동성이 워낙 커 이런 추세가 이어질 것으로 예단하기는 어렵다"고 말했다.

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