Published : Aug. 8, 2011 - 11:54
Seoul shares tumbled to its lowest in almost two years on its first trading day since the historic cut of the U.S. credit rating Saturday, underperforming regional peers in Asia at the increased sovereign risk of the world’s most powerful economy.
(Yonhap News)
The benchmark KOSPI lost 3.82 percent to close at 1869.45, after touching as low as 1,800 mid-day, at which point the bourse operator halted program trading for five minutes to stop further losses. Korea Exchange also suspended of all trade on the junior KOSDAQ for 20 minutes earlier in the day.
The local currency closed at 1,082.5 won to the greenback, down 15.1 won from Friday‘s close, as foreign investors continued to sell local shares for the fifth straight session, dealers said.
“Seoul market fall was no different from its peer indexes in other emerging economies but the fear about the dimming U.S. economic outlook seems to be bigger here for its export-reliant economy,” Kim Jung-hoon, a strategist at Korea Investment & Securities said.
The retreat of more than 7 percent in the intra trading day is the index’s steepest losing streak since the 2008 financial crisis. KOSPI rounded up almost 17 percent of drop in August.
The junior KOSDAQ lost 6.63 percent and finished at 462.69.
Samsung Electronics, the biggest exporter of consumer electronics here, lost 3.68 percent to 760,000 won a share. Hynix Semiconductor suffered 7.22 percent of loss and closed at 21,850 won a share.
President Lee Myung-bak convened an emergency meeting with the finance minister, the central bank chief and other finance officials to contain the impact of the debt ratings cut in the U.S. Asian stock markets across Hong Kong, Singapore and Japan suffered losses between 2 to 4 percent during its trading hours Monday.
Finance Ministry officials conducted an emergency meeting at a working level amidst the selling spree to examine the impact of the biggest retreat in almost three years.
“Korea’s economic fundamentals are much stronger than it was during the 2008 global financial meltdown, so the market will recover at a relatively fast pace,” a Finance Ministry official said.
“Korea’s diversified basket of trading partners and ample exchange reserves will help the economy stave off the external shocks,” he said.
Korea has the world’s seventh largest foreign reserves, of which over 60 percent is denominated in the U.S. dollar.
By Cynthia J. Kim (
cynthiak@heraldcorp.com)