Stocks Plunge on Concern Over US Economy
KOSPI Slips Below 1,840 Points for 1st Time in Two Weeks
By Lee Hyo-sik
Staff Reporter
Seoul stocks closed sharply lower Monday as investors dumped shares in line with weak global markets on worries about the continued U.S. credit market crisis. Also, rising inflationary pressure in the U.S. worsened investor sentiment as high consumer prices are expected to prevent the U.S. Federal Reserve from further cutting interest rates, analysts said.
Following Friday's steep fall on Wall Street, the benchmark KOSPI fell 55.23 points, or 2.91 percent, to 1,839.82. The tech-heavy Kosdaq closed down 23.04 points, or 3.18 percent, at 702.49.
This is the first time in about two weeks that the KOSPI has fallen below 1,840 points.
Other Asian stock markets also faltered on weak U.S. stocks. The Tokyo Stock Exchange's benchmark Nikkei-225 index dropped 264.72 points, or 1.71 percent, to 15,249.79, while Taiwan's weighted index close down 287,23 points, or 3.54 percent, at 7,830.85.
``A fall in U.S. stocks last Friday heavily weighed on investor sentiment here, making foreign investors sell off shares for the sixth consecutive sessions,'' Woori Investment & Securities analyst Ted Oh said.
The Dow Jones Industrial Average closed down 178.11 points to 13,110.05 on concerns over rising inflationary pressure, while the tech-heavy Nasdaq composite index fell 32.75 points to 2,635.74.
Oh said expectations for further interest rate cuts by the U.S. central bank have cooled on surging consumer and producer prices there, fueling concerns over the possibility of the U.S. economy falling into stagflation. ``U.S. investors had counted on the Federal Reserve to reduce key rates to help stabilize the financial market. But rising inflationary pressure dashed such a hope and made U.S. investors dump shares, which also negatively affected the overall investment mood here,'' Oh noted.
He said it is unlikely that the Seoul market will enjoy the typical year-end rallies this month, adding the market will remain volatile for the foreseeable future.
Among blue chip stocks, Samsung Electronics fell 3.61 percent to close at 560,000 won, while LG Philips LCD lost 2.98 percent to 45,500 won.
The world's third largest steel maker POSCO dropped 1.86 percent to close at 578,000 won. Financial shares also extended their losses for another session Monday, led by the country's larges retail lender Kookmin Bank whose shares fell 2.21 percent to 66,200 won.