KOSPI Dives to 938; Won Falls to 1,420
By Lee Hyo-sik
Staff Reporter
Seoul stocks fell sharply Friday, with its main index falling below a psychologically important 1,000 point for the first time in 40 months, on growing concerns over a worldwide economic recession and its fallout on the Korean economy.
The won also plunged to a 10-year low against the dollar as foreigners continued to dump local shares and took dollars out of the country on the worsening global financial crisis.
The benchmark KOSPI plummeted 110.96 points, or 10.57 percent, to close at 938.75, falling below the 1,000 points for the first time since June 29, 2005 when the index stood at 999.08, despite modest gains on Wall Street overnight. The tech-heavy Kosdaq also tumbled 32.27 points, or 10.45 percent, to 276.68.
Following steep a fall on the stock markets caused by panic selling, the Bank of Korea (BOK) provided 2 trillion won ($1.4 billion) to local securities firms and asset managers through repurchase agreement deals in a preemptive measure to supply more liquidity for them.
The central bank said that it bought 28-day repurchase agreement deals from Korea Securities Finance Corp., which then provides financing to cash-strapped securities houses and asset managers.
Markets across Asia also fell sharply with Japan's benchmark Nikkei 225 stock average plunging 811.90 points, or 9.6 percent, to close at 7,649.08.
``A series of negative economic data and the won's weakness against the greenback created a panic selling of local shares. In addition, Wall Street Journal's report that the International monetary fund (IMF) is planning to help South Korea and other developing nations to weather the global financial crisis also fueled the sell-off,'' Daishin Securities analyst Sung Jin-kyung said.
But the Ministry of Strategy and Finance flatly dismissed such a report, stressing Korea does not need money from the IMF or any other countries.
Also, Samsung Electronics' weaker-than-expected earnings further depressed investor sentiment.
``Many expected that the psychologically important 1,000 points would be firmly held up. But once the KOSPI fell below that mark, investors went panic selling. But the bourse will likely recover to some extent on technical rebound next week,'' Sung said.
Most blue chip stocks sustained hefty losses on massive selling. The nation's largest shipbuilder Hyundai Heavy Industries fell 14.76 percent to close at 115,500 won with Samsung Heavy Industries declining 14.72 percent to 13,900 won.
The world's largest memory chipmaker Samsung Electronics saw its shares drop 13.76 percent to 407,500 won after announcing a more than 40 percent drop in the third quarter earnings from a year earlier. Hyundai Motor also fell 7.89 percent to 46,700 won, with POSCO's share sliding 12.16 percent to 242,000 won.
The local currency closed at 1,424 won against the dollar, down 15.2 won from Thursday's close, as foreign investors sold local shares, converted money into dollars and took them out of the country. The won has depreciated nearly 34 percent to the greenback this year.