South Korea’s stock market once again renewed its all-year low on Monday, closing below the psychologically significant threshold of 2,000, despite the government’s urgent moves for countermeasures.
The market benchmark index on Monday closed at 1996.05, down 31.1 points or 1.53 percent from the previous session’s close. During the last half hour of trading, the index fluctuated up and down the 2,000 mark, after its first sub-2,000 dip at around 2:53 p.m.
This marked the fifth consecutive day of market retreat, as well as the first time in 22 months that Kospi fell lower than 2,000, widely considered a key psychological barrier for the market.
The tech-heavy secondary Kosdaq also tumbled to below 640, closing at 629.7, down 33.37 points or 5.03 percent from the previous close.
The electronic display board in KEB Hana Bank’s dealing room in central Seoul shows the top-tier stock market Kospi closing at 1,996.05 on Monday, down 31.1 points, or 1.53 percent, from the previous close. (Yonhap)
Monday’s market collapse came in spite of Seoul’s hurried move to respond to the latest stock depreciation.
Earlier in the day the government had pledged to inject some 500 billion won ($438 million) or more into the two bourses, as part of efforts to stabilize the market.
“The Kosdaq Scale-up Fund, which was to be set up at 200 billion won by year-end, will be expanded to 300 billion won, an amount to be invested into undervalued Kosdaq companies starting next month,” Kim Yong-beom, vice chairman of the Financial Services Commission, said at a meeting with senior executives of local brokerages.
“Also, the government will establish a fund of 200 billion won or more in order to invest into the Kospi and Kosdaq.”
Local brokerage chiefs also held an urgent meeting to discuss ways to initiate a task force, according to the Korea Financial Investment Association.
These measures, however, were also criticized for lacking tangible approaches to the drastic market changes.
“The interest rate issue was not a key agenda,” Kofia Chairman Kwon Yong-won told reporters after the CEO meeting.
The rate hike moves from the US Federal Reserve is counted as one of key reasons for the capital outflow from Seoul’s market. As the Bank of Korea froze the country’s base interest rate at 1.5 percent earlier this month, the interest rate gap between Washington and Seoul currently remains at 50-75 basis points.
In order to prevent further capital outflow, Seoul faces heavier pressure to carry out its hike within the year while hoping the US begins to increase its own rates more slowly.
While Kospi has shed about 20 percent so far this month, the country’s leading businesses are suffering from the latest market slump.
Data released by corporate tracker Chaebul.com showed Sunday the aggregated market cap of the top 10 business groups here stood at 811.3 trillion won as of end-Friday, down 16.2 percent, or 156.7 billion won, from the end of last year.
Among them, seven saw double-digit falls during the same period, including market indicator Samsung Group, which marked a 15.8 percent, or 81.2 trillion won drop, from 514.3 trillion won to 433.1 trillion won.
By Bae Hyun-jung (tellme@heraldcorp.com)
