KOSPI Dips to 1,600 on Subprime Woes

By Park Hyong-ki

Staff Reporter

Seoul stocks extended their losses on the worsening subprime woes, with the benchmark KOSPI index plunging below the psychologically important level of 1,600 points during trading.

The KOSPI market shed 15.36 points, or 0.95 percent, at 1,600.26, while the tech-heavy Kosdaq market closed down 4.10, or 0.65 percent, at 617.71.

Despite overnight gains on Wall Street, the Seoul market could not avert continued losses as investors sentiment quickly froze following the news of Carlyle Capital that the affiliate of private equity firm Carlyle Group is facing a financial collapse due to defaulted debts.

``Although it has been working diligently with its lenders, the company has not been able to reach a mutually beneficial agreement to stabilize its financing," said Carlyle Capital in a statement.

The Dow Jones Industrial Average rose 35.50, or 0.29 percent, at 12,145.74 Thursday, while the S&P500 finished up 6.71, or 0.51 percent, at 1,315.48. The tech-loaded Nasdaq market increased 19.74, or 0.88 percent, to 2,263.61.

Stocks on Wall Street closed up slightly as Standard & Poor's projected earlier that write-downs of subprime mortgage losses by financial firms will end soon, which helped ease investors' worries about a U.S. recession.

However, analysts say troubles are far from over, and warned investors to brace for more plunges and volatilities ahead.

``The stock market can take a heavy beating below the 1,550 mark on lingering credit woes,'' said Park Sang-hyun, an analyst of CJ Investment & Securities.

Steel shares led overall losses on the KOSPI and Kosdaq markets. Korea's No.1 steel producer POSCO shares plunged 4.12 percent, or 19,000 won, at 442,000 won. Tech-heavyweight Samsung Electronics shares closed down 0.54 percent, or 3,000 won, at 547,000 won. No.1 shipbuilder Hyundai Heavy Industries shares shed 3.73 percent, or 13,000 won, at 335,000 won.

phk@koreatimes.co.kr