Stock Prices Drop Sharply by 38P

The composite stock exchange index marked the second largest drop in the year since the sharp decline on Sep. 12 caused by the Terrorist Attacks on the U.S.

The composite stock exchange index closed at 632.02, marking a fall of 38.08 points. The stock prices started from 8 points lower than that of the previous day and dropped sharply as time went by. The numbers of stocks traded on that day decreased sharply to 700 million, and the amount of money to near 3 trillion won. The stock indexes of all industries dropped.

742 items marked a drop, 8 times the number of items marking an increase. Kosdaq index also dropped by 4.29 points, marking 67.99.

The drop of the day occurred as a result of heavy sellouts by foreigners, which weakened the sentiment of investment as well as by an overlapping of bad news coming from inside and outside the nation. The foreign investors turned to selling-out in 5 days and made net sale amounting to15 billion won. Foreigners changed their attitude even in the Kosdaq market and made net sale amounting to a total of 3.9 billion won.

The drop is also attributed to the fact that the U.S. consumer confidence index released on Nov. 27 (local time) was found lower than it was expected, and as a result, the U.S. stock market turned to a bearish trend in three days. In addition, the news that the tension is being heightened as the U.S. attacked Iraqi air defense system, and that the plan to allow pensions to be invested to the stock exchange was cancelled by the oppositions from the Grand National Party entered the stock market in the late hours of the day, and thus weakened the sentiment of investment.

Kyobo Securities Co. Investment Strategies Team Director Im Song-Hak said, "The drop of the day is attributed to an overlapping of bad news coming from inside and outside the nation as well as to a concern caused by a sharp increase of stock prices without an adjustment worth mentioning."

Dong-Keun Keum gold@donga.com