Shares drop 30 points due to global jitters, biz performance

The Korean benchmark stock index KOSPI dropped more than 30 points Wednesday due to mass unloading of shares by institutional and foreign investors.

Experts blamed unfavorable factors in the U.S. and Europe and fears over poor performance of Korean companies in the first quarter this year for the fall.

The KOSPI plummeted 30.67 points or 1.5 percent Wednesday from Tuesday to close at 2,018.61. The index had risen for the second straight day Tuesday to nearly 2,050 points, but fell to the 2,010 level Wednesday.

Institutional investors sold 407.6 billion won (361 million U.S. dollars) worth of stocks the same day, the largest since 348.3 billion won (308 million dollars) were sold Feb. 16.

Foreign investors also unloaded 70.6 billion won (62.5 million dollars) worth of Korean stocks. The sole net buyers were individual investors with 172.6 billion won (153 million dollars).

Shares in Samsung Electronics shot up to a record 1.35 million won (1,195 dollars), but fell 1.12 percent or 15,000 won (13 dollars) the same day. Shares in Hyundai Motor also dropped 0.59 percent after reaching an all-time high.

The bearish market in Korea is attributed to unfavorable external and internal factors. Wall Street turned bearish with expectations for quantitative easing in the U.S. declining, and the fiscal crisis in Spain further weakened investor sentiment.

Kim Hyeong-ryeol, in charge of investment strategy at Kyobo Securities, said, “The KOSPI sharply declined in the afternoon because of fears over poor performance of Korean companies excluding Samsung Electronics and finished carmakers in the first quarter of this year.”

The fear over poor performance prompted analysts to recommend a conservative investment attitude. This means that a worse-than-expected performance by Korean companies, in particular Samsung, could cause the entire stock market to be in the doldrums.

Experts said the stock rally now focused on large-cap stocks will need time to spread to small and medium-cap stocks, and advised split purchases of stocks.

libra@donga.com