KOSPI Plunges, Won Weakens to 1,031
By Yoon Ja-young
Staff Reporter
Soaring oil prices, which hit a record-high during the weekend, pulled down stock prices while pushing up the won/dollar exchange rate.
The main KOSPI index opened the day at 1,787.90 points, down 44.41 points, or 2.42 percent, compared with Thursday. It is the first fall below 1,800 since May 26. The market was closed Friday ― Memorial Day.
The KOSPI gained during the session, closing at 1,808.96 points. It is down 23.35 points, or 1.27 percent from last week. The junior, tech-heavy Kosdaq market fell 7.09 points, or 1.1 percent, to 637.
Individual investors and institutional investors bought up shares, but they couldn't sustain the market as foreign investors net sold 170 billion won on the bourse.
Analysts said that high oil prices pulled down the index. Oil prices, which have shown signs of stabilization recently, began to rally again. West Texas Intermediate recorded a new high last weekend, breaching $139 per barrel, adding to concerns that prices will break $140 soon.
Oil prices will continue determining the direction of the stock market ― it could fall further if prices continue their rise. ``The index could fall below 1,770 points if oil breaches $150 per barrel; if the new government's growth-oriented policy causes inflation and conflict between labor and management; and if U.S. financial firms record heavier losses,'' said Kim Se-joong, an analyst at Shinyoung Securities.
The oil price hike made the dollar strengthen against the won, pushing up the won/dollar rate. The exchange rate started at 1,032 won per dollar in the morning session on the foreign exchange market, up 8.5 won from last week. It once rose above 1,033 won, but moderated a little during the session, closing at 1,031.8 won per dollar, up 8.3 won. Analysts attributed it to the oil price hike and the falling stock market, which means more demand for dollars.