Stocks extend losses on China's property market crisis

Finance Minister Choo Kyung-ho speaks in a meeting held in central Seoul on July 27. [YONHAP]

Korea’s stock market is falling on fears of spreading contagion effects of the liquidity crunch in China’s property sector.

The Kospi is falling for five consecutive trading days on Thursday, reaching as low as 2,482.06 during intra-trading, down 1.73 percent from the previous day. It was the first time in three months since the Kospi slid below 2,500 points during trading hours.

Won reached above 1,340, nearing the annual low of 1,343 won on May 17.

Markets weakened on the growing concerns about the spread of risks caused by the slump in China’s property market.

China’s property market faces challenges as trust firm misses payments and home prices fall.

Country Garden Holdings, one of China’s largest developers, said last week it had not paid two dollar bond coupons that were due on Aug. 6, totaling $22.5 million.

The developer, which had total liabilities of around $194 billion at the end of last year, warned that it expects to post a net loss of up to 55 billion yuan ($7.59 billion) for the first half of this year compared with earnings of around 1.91 billion yuan in the previous year.

The government on Wednesday said it strengthened monitoring of the foreign property market in case of contagion fears.

It is estimated to have invested more than 50 trillion won ($37.2 billion) in overseas real estate as of March, according to media reports. That is less than 1 percent of the total assets in the financial sector.

BY JIN MIN-JI [jin.minji@joongang.co.kr]