KOSPI plummets to another yearly low

With the massive disposal of shares of Hyundai Electronics Ind. (HEI), Hyundai Engineering & Construction Co. (HEC) and other affiliates of the Hyundai Group by foreign investors, the composite index on Tuesday plunged. Share prices of most Hyundai affiliates ended in their daily permitted lows, while the composite index once again broke the yearly low, reverting to a level not seen since a year and eight months ago. Consequently, market sentiment quickly cowered. The aggregate value of listed stocks recorded 192.13 trillion won, plunging below the 200 trillion won level for the first time since May 1999. The Korea Stock Exchange¡¯s composite index on Tuesday dropped by 37.25 points (6.77%) from the previous day and recorded 512.85, breaking the 524.60 recorded on September 13, the lowest point of the year. The index is the lowest since the 499.14 recorded on February 25, 1999.

The KOSDAQ index also sharply dropped by 6.31 points (7.27%) to end at 80.40, barely staying in the 80s. The fall of the share prices has stemmed from the plunging share prices of Hyundai related companies, Samsung Electronics and other semiconductor companies.

Foreign investors¡¯ massive disposal of Hyundai related shares was a good enough reason to worsen the market sentiment. Foreign investors have placed sell orders for 2.81 million shares of Hyundai Electronics Ind. through Credit Lyonnais Securities, prompting Hyundai share prices to plunge to the daily allowed low. Its per-share price has dropped below 10,000 won for the first time in history. Moreover, share prices of HEC, Hyundai Securities, Korea Industrial Development also plunged to their daily allowable lows. Out of 11 Hyundai affiliates, share prices of 10 slackened. Share prices of Hyundai Motor, which spun off from the Hyundai Group, also dropped by 14%.

Head of investment information team at SK securities, Park Yong-Sun, asserted that the talk of debt-to-equity swaps for HEC, which is believed to be in a liquidity crisis, and the rumor that the foreign investment induction of 1.1 trillion won from the AIG Group promoted by Hyundai Securities and Hyundai Investment Trust Management may have gone sour, spurred the plunge of Hyundai affiliates¡¯ share prices.