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KOSPI falls below 2,000

Feb. 11, 2011 - 20:44 By 김연세
Seoul stocks plunged to a two-month low on Friday as foreigners continued their selling spree and an interest rate freeze stoked investor jitters, analysts said.

The benchmark Korea Composite Stock Price Index sank 31.31 points, or 1.56 percent, to 1,977.19, extending a losing streak to a fourth session. The benchmark index fell below the 2,000-point level for the first time this year, sinking to its lowest level since Dec. 8, 2010.

Trading volume was moderate at 312 million shares worth 7.35 trillion won ($6.56 billion), with decliners trumping advancers 627 to 200.

“Foreign investors felt pressure about possible monetary tightening and a need to lock in profits,” said Han Beom-ho, an analyst at Shinhan Investment Corp.

“Hiking the key interest rate could have resolved some uncertainties in the market, but it wasn’t very positive to the market sentiment that we might have to wait another month (for a possible rate hike).”

Foreign investors reduced a net 614.8 billion won worth of local stocks, compared with about 1.1 trillion won worth of net selling in the previous session. It was their fourth consecutive session with net selling.

Earlier in the day, the Bank of Korea froze its key interest rate at 2.75 percent for February, citing that uncertainties in the domestic and global economies are feared to sap the nation’s recovery.

Most sectors lost ground, with insurance and financial companies bearing the brunt of the rate freeze, as higher interest rates could have boosted their earnings.

Top life insurer Samsung Life Insurance retreated 2.83 percent to 103,000 won. Hana Financial Group plunged 5.66 percent to 42,500 won.

Tech blue chips were bearish, hit by foreign sell-offs. Tech powerhouse Samsung Electronics was down 2.24 percent to 915,000 won, and the world’s No. 2 flat-screen maker, LG Display, fell 1.85 percent to 37,050 won.

Commodity makers also weighed on the key index following their recent surges. Top steelmaker POSCO dipped 0.93 percent to 480,000 won, and its smaller rival Hyundai Steel plunged 6.47 percent to 130,000 won.

The local currency closed at 1,128.6 won to the greenback, down 11.6 won from Thursday’s close, as foreign investors cut local stocks, dealers said.

Bond prices, which move inversely to yields, closed mixed. The yield on three-year Treasuries fell 0.02 percentage point to 3.94 percent, and the return on the benchmark five-year government bonds added 0.02 percentage point to 4.47 percent. 

(Yonhap News)