By Park Hyong-ki
Staff Reporter
The stock market rebounded after two straight days of steep losses, after overnight rate cuts by the U.S. Federal Reserve in response to global stock collapses.
The benchmark KOSPI closed up 19.40 points, or 1.21 percent, at 1,628.42, and the tech-heavy KOSDAQ climbed 5.18 points, 0.84 percent, to 619.98. Foreign investors remained as the sellers, unloading over 570 billion won worth shares on the main bourse.
The Fed's slash of its interest rates after an emergency meeting was able to avert massive losses on Wall Street where the Dow Jones Industrial Average fell 128.11 points, or 1.06 percent, to 11,971.19, and the S&P500 shed 14.69, or 1.11 percent, at 1,310.50.
The U.S. central bank's benchmark rate cut by 0.75 percentage points to 3.5 percent sent European and Asian bourses up.
The FTSE 100 closed up 2.9 percent at 5,740.1, while France's CAC 40 edged up 2.1 percent to 4,842.54.
The fear of a U.S. economy recession has heavily tumbled global bourses over the past two days as investors were not convinced that its stimulus package will revive the dipping confidence and consumption in the world's biggest market.
Analysts say the Fed's surprising move along with the country's tax relief plans will lessen the burden on household and mortgage debts. However, they warn that the global markets are not totally safe from the lingering credit problems, given that the total loss from subprime defaults is still not fully calculated.
``Financial uncertainties will cloud global markets throughout this year,'' said Lim Kyung-mook, an economist at the Korea Development Institute.
Vice Finance Minister Kim Seok-dong said the government and the central bank will inject liquidity into the financial market should investors rush to redeem their equity funds amid a bearish run.
After holding a meeting among economic and financial officials, the vice minister told reporters, ``The government will support the asset management industry by injecting capital through repo investments when faced with a sudden rush of fund redemptions.''
He noted that the central bank can also help out the industry's banking partners that operate mutual funds in an emergency situation.
He added the government is considering pushing the pension fund to expand investment in Seoul stocks earlier than planned as a means to stabilize the market.
The pension fund plans to invest an additional 9 trillion won in stocks this year. Its stock investment holdings reached 30 trillion won last year. Kim said the government is thinking of expanding its 9-trillion-won investments further, if necessary.
``We will also seek support from other national funds to bring balance to the market,'' he said.
phk@koreatimes.co.kr