Hana, KB Shed Most in Bank Stocks’ Tumble
By Kim Hyun-cheol
Staff Reporter
The credit crisis stemming from the failures of Lehman Brothers and Merrill Lynch continued to have a negative impact on Seoul stocks Thursday, with financial and bank-related items struggling further.
The KOSPI index plunged below 1,300 to close at 1,392.42, down 32.84 points, or 2.3 percent, after rebounding from the year's new low of 1366.88 during the day. The tech-heavy KOSDAQ market also shed 11.17 points, or 2.51 percent, to close at 433.76.
Financial holdings and bank stocks led the overall downturn, dropping 9.74 percent and 5.13 percent, respectively, and aero-transport items also struggled.
Even though the U.S government decided on a $85 billion aid package to help a deeply troubled AIG, Korean stocks could not oppose the aftermath of a falling Dow Jones due to anxieties the current crisis might cause a chain reaction to other investment banks like Morgan Stanley and Goldman Sachs.
"Suspicions about large investment led to a substantially sinking New York stock market and even spread to the bourse here," said Kim Se-joong, head of the investment strategy team at Shinyoung Securities.
Stocks of large banks fell at the vigor less market, led by Woori Finance and KB with 9.81 percent and 7.12 percent falls, respectively. Hana Financial Holdings, which owns 2 million Merrill Lynch stocks, had to watch its stock nosedive 13.95 percent for the day.
In a rare exception, Eugene Securities enjoyed a surge nearing the daily maximum thanks to news of ongoing talks on the sale of the brokerage.
Insurance stocks continued their slide, with news of an ailing AIG haunting the bourse. Dongbu Insurance dropped 7.42 percent and Meritz Fire & Marine Insurance 7.18 percent.
Analysts said the downward spiral is not likely to calm down.
"Forex liquidity of banks are being questioned to drive their stock near the daily limit," Park Jung-hyun at Hanwha Securities said. "It might be not too serious an issue as it appears, but the market is hyper-sensitive at the moment."
Hong Jin-pyo, a banking analyst at Goodmorning Shinhan Securities predicted the fundamentals would be worsened of financial stocks.
"But it's also true current stock prices reflect too much of the expectation," Hong said.