By Kim Jae-won
Korea’s tech-savvy minor bourse, KOSDAQ, fell more than 6 percent Friday on uncertainties over U.S. interest rates and the sluggish Chinese economy, prompting its operator to suspend trading temporarily, analysts said.
The KOSDAQ dropped 6.06 percent to 608.45, triggering a circuit breaker to suspend its operation for 20 minutes before noon to ease turmoil. It was the first time since Aug.9, 2011, that trading had been halted.
The benchmark KOSPI plunged 1.41 percent to 1,835.28, after falling 3 percent the previous day.
“Investors rushed to sell their chips in the KOSAQ because they worried over the relatively high valuation in the bourse,” said Kim Yong-ku, an analyst at Samsung Securities. “Uncertainties over the U.S. interest rate, along with sluggish growth in China, also weighed on the market.
“And concerns that European financial institutions are in danger of collapse also emerged as a black swan in the market, pulling down the stocks further.”
The local currency lost 9.2 won, finishing at 1,211.7 won to the U.S. dollar.
The index got off to a weak start, taking a cue from the overnight loss on Wall Street. The downswing got worse as other Asian markets opened lower.
On Thursday, the Dow Jones Industrial Average plunged 1.6 percent as concerns over slowing growth weighed on the market. Volatility deepened later as other Asian markets tumbled.
Japan’s Nikkei 225 fell 4.8 percent to 14,952.61 after earlier sinking as much as 5.3 percent. Hong Kong’s Hang Seng fell 1 percent to 18,364.14. Markets in China and Taiwan are closed until Monday for Lunar New Year holidays.
Foreigners and retailer investors unloaded about 300 billion won and 190 billion won worth of shares, respectively. Institutions remained net buyers.
Major sectors ended in negative terrain as growing risk aversion prompted investors to trim holdings. Pharmaceutical, brokerage and cosmetics companies led the slide.
Hanmi Pharmaceutical plummeted 9.73 percent to 631,000 won, and Yuhan Corp. fell 10.73 percent to 283,000 won. Samsung Securities dropped 3.5 percent to 34,500 won. Leading cosmetics maker AmorePacific fell 5.72 percent, and its smaller rival, LG Life & Healthcare, went down 6.27 percent.
Auto issues, however, were among a few marked gainers as optimism grew that the yen’s ascent could boost their business in global markets. No. 1 carmaker Hyundai Motor jumped 4.58 percent.