Stock Price Breaking 700 Points, the Lowest Points In the Year

Korean stocks closed at the lowest points throughout the year, breaking 700 points. Korean Won jumped by \19.00 against the US dollar, as foreign investors withdrew the securities funds. KRW/USD closed at \1,190.

On July 26, KOSPI slumped to 697.84 decreased by 25.68 points (3.55%) over the last day. At that day, KOSPI was the lowest points since December 28, 2001 (693.70 points). KOSDAQ closed at 58.33 decreased by 1.9points (3.15%) over the last day.

On July 25 (local time), the Nasdaq composite index closed at 1,240.08 decreased by 50.15 points (-3.89%). It was forecasted that the US stock market has turned to the bearish sentiment only after a day’s rally and the results of third quarter would slow.

As foreign investors purchased securities of KRW 333.3 billion focused on Samsung Electronics and SK Telecom, the securities have been purchased for 9 days on the basis of trading date. At that day, this purchase of foreign investors was the second-largest scale this year.

Foreign investors sold KOSPI 200 future for KRW 19.1 billion. In addition to foreign investors, individual investors sold their futures. Hence, ‘side car’ was exercised to interrupt the transaction for a little while because the future price slumped by over 5%.

Besides, in Seoul exchange market, KRW/USD rate ended at 1190.4 won increased by 19.5 won over the last day. That the Korean won increased by KRW19.00 only for one day against the US dolar, was the first time since April 4 2001 (KRW 21.5).

Lee, Chang-Hyeong, Vice-director of Foreign market team, Bank of Korea forecasted “As the US fund managers withdrew the investment funds to answer to the repurchasing request of customer, the foreign exchange rate increased sharply. Owing to the stocks selling of foreign investors, the exchange rate will keep to KRW 1180~1200 for a while.”

Sang-Chul Kim Na-Yeon Lee sckim007@donga.com larosa@donga.com