Stocks dip below 1,900 on U.S. concernsKorean stocks surrendered the 1,900 mark as foreign investors dumped them due to growing concern that the U.S. Federal Reserve may wind back its quantitative easing measures.
The World Bank is cutting its global economic growth forecast to 2.2 percent yesterday for this year, down from its January forecast of 2.4 percent, which has caused Asian stocks to tumble amid concern that central banks may pare the stimulus.
The benchmark Kospi closed at 1,882.73, down 1.43 percent. The Kospi, which started the day at 1,905, slipped under the 1,900 mark and fell as low as 1,880 during trading hours.
Foreign investors dumped a net 948.6 billion won of Korean shares, while institutional investors bought a net 488 billion won of local shares and retail investors snapped up a net 443.7 billion won worth of stocks. Retail investors continued their buying streak of Korean stocks for six straight trading days and institutional investors continued their buying for five straight trading days.
The benchmark index in Asia headed toward a correction, after the World Bank cut its growth forecast amid concern central banks may pare the stimulus.
The Federal Open Market Committee meets next week after the Bank of Japan this week left its lending program unchanged. Global stocks have plunged 5.2 percent from their May 21 peak this year on speculation the Fed may ease the stimulus.
“People are still trying to assess the prospects, likelihood and timing of tapering from the Federal Reserve,” Chris Green, an Auckland-based strategist at First NZ Capital, a brokerage and wealth management firm, said. “Markets want stability in the economy but they also want unlimited stimulus. The two can’t continue to exist together.”
Japan’s Nikkei 225 Stock Average closed down more than 20 percent from a May 22 high, entering a bear market. The MSCI Emerging Markets Index retreated 1.9 percent, headed for its lowest close since July. Stocks in Malaysia, Taiwan, the Philippines, Indonesia and India tumbled.
Federal Reserve Chairman Ben S. Bernanke said May 22 the Fed could scale back stimulus efforts should employment show “sustainable improvement.”
BY KIM MI-JU, BLOOMBERG [email@example.com]