KOSPI Dives 2% on Renewed Global Credit Woes
By Lee Hyo-sik
Staff Reporter
Seoul stocks plunged across the board Tuesday as renewed credit market jitters regarding subprime mortgage defaults and rising oil prices weighed down on investor sentiment.
The benchmark KOSPI tumbled 31.09 points, or 1.95 percent, to 1,567.2. Volume was low at 258.1 million shares worth 4.11 trillion won, with losers outnumbering gainers 672 to 148. The tech-heavy Kosdaq lost 8.69 points, or 1.6 percent, to close at 535.36.
Other Asian markets also closed lower on the U.S. market decline. Japan's Nikkei Average slid 194.33 points, or 1.46 percent, to close at 13,159.45.
Overnight, the Dow Jones Industrial Average shed 2.11 percent, closing at 11,131.08, and the tech-heavy Nasdaq composite index fell 2 percent to 2,264.22.
U.S. stocks fell as investors dumped financial shares following the International Monetary Fund's (IMF) latest report, depicting a bleaker picture for the U.S. housing market and overall economy. The international organization said the market slump was far from over, adding the credit crisis is having a negative impact on the global economy, and global financial markets continue to remain fragile.
Also, rising oil prices did not help U.S. share prices either. The news of a Nigerian rebel attack on an oil pipeline operated by Royal Dutch Shell pushed international crude prices higher overnight. The West Texas Intermediate (WTI) for September delivery jumped $1.47 to $125.75 per barrel on Monday.
``The U.S. market dropped as investors continue to worry about the never-ending financial market uneasiness. As always, the sluggish Wall Street dampened investment psychology here, making foreigners and institutional investors dump domestic shares,'' Daishin Securities analyst Sung Jin-kyung said. Foreign investors net sold local stocks worth 143 billion won, while institutions dumped shares worth 148 billion won.
Sung said higher international oil prices further worsened investor sentiment here, projecting a big jump in the benchmark KOSPI will be unlikely in the coming days.
Market leader Samsung Electronics fell 2.86 percent to 544,000 won, with LG electronics losing 7.31 percent to close at 101,500 won.
Financial shares declined sharply, following in the footsteps of their U.S. counterparts. The nation's largest retail lender Kookmin Bank dropped 2.63 percent to 55,500 won and Shinhan Financial Group saw its shares fall 1.93 percent to 45,700 won.
The won weakened against the dollar as foreigners sold local shares and converted the money into dollars before taking it out of the country. The local currency closed at 1,008.8 won against the greenback, down 3.6 won from previous trading.