KOSPI Plummets for Fifth Straight Day

The nation’s benchmark Korea Composite Stock Price Index (KOSPI) recorded its fifth-straight daily plunge Wednesday amid a series of woes such as an unsettled global financial market, skyrocketing oil prices, the slowdown of the U.S. economy, and the possibility of China adopting an austerity policy.

In addition, steep declines in values of bonds and the won have led to a “triple weak” situation, referring to simultaneous dips in stock prices, bond prices, and the value of the won, sending the market into chaos.

Surging global oil prices, with New York’s WTI benchmark hitting a fresh record above 99 dollars a barrel on Wednesday, are burdening both local and world economies as well.

The KOSPI index tumbled for the fifth day in a row on the same day, closing at 1,806.99, a 66.25 point (3.49 percent) decline compared to the previous day. The tech-laden KOSDAQ index closed down 12.14 points or 1.6 percent at 727.33.

The KOSPI fell by 165 points over the last five days, and by 257 points total this month. Japan’s Nikkei Stock Average ended at 14,837.66 yesterday, losing 373.86 points, or 2.46 percent, while the benchmark Shanghai Composite Index closed down 79.48 points, or 1.50 percent, at 5214.23, the Hang Seng Index in Hong Kong tumbled 4.15 percent, and stock indices in Taiwan and Singapore dropped more than 2 percent.

At the same time, interest rates are soaring. The 91-day CD rate, the benchmark for floating rate housing loans, rose 0.03 points to an all-time high of 5.48 percent in six years and four months, increasing borrowers’ burden on debt payment. 3-year and 5-year treasury bond rates also rose 0.1 point each to 5.65 percent and 5.71 percent per annum, respectively.

As foreign investors unloaded shares at local bourses, the won fell, closing at 928.90 won against the dollar, down 6.70 won. The local currency also fell to its lowest level in 18 months against the Japanese yen as investors rushed to abandon the yen-carry. The won closed at 856.40 won against 100 yen, down 16.09 won from the previous day.

Meanwhile, January WTI crude futures, traded in the U.S. on Wednesday (local time), closed up 3.39 dollars to $98.03 per barrel, and they rose to 99.29 dollars a barrel in after-hour trading. Dubai oil prices also rose by 0.62 dollars to 87.40 dollars per barrel.