KOSPI closes at 504.62, records biggest-ever year-on-year drop

The Korea Composite Stock Price Index (KOSPI) closed the year's last trading session Tuesday at 504.62 points, registering a record plunge of 52.35 percent from 1,059.04 at the start of the year.

The KOSDAQ market had an even worse year, as its index nosedived to 52.58 points, one fifth of the year's highest level, after it began to fall on Mar. 10 when it was about to exceed the 300-point mark at 290. The latest figure was also an all-time low.

Individual investors poured in an astronomical amount of about 120 trillion won into the stock market this year. The market trend was almost identical to that on the eve of the so-called IMF crisis three years ago. The index fully recovered its strength the next year thanks to the IMF bailout.

Overall conditions for next year¡¯s market appear even worse due to the greater uncertainty. The crash in stock prices caused a major fall in overall prices, but there are many factors causing investors to hesitate to buy.

Investor confidence in the national economy is all but nonexistent amid expectations of a sustained slump next year. Furthermore, negative elements like industrial unrest, as witnessed in the strike by unionized bank workers, are expected to remain.

The surprise announcement of a planned merger between Kookmin Bank and Housing & Commercial Bank (H&CB) was increasingly losing its effect in the face of the strong opposition of their unions.

This situation is feared to be connected to the poor investment sentiment, in that it is weakening the credibility of the overall restructuring effort.