Stock Prices Takes a Downturn

The domestic share market is taking a tumble amid the downward spiral on stock markets all across the world.

The won is getting stronger against the dollar mainly due to the selling binge of foreign investors. The international oil prices are also on the increase over the fear of the planned invasion of Iraq by the U.S. All these outside factors are having negative impact on the Korean economy.

The KOSPI, which plummeted to a record low on Tuesday, dropped again on Wednesday by 14.32 points to 657.96, the lowest point ever since December 26, 2001.

The tumbling stock market without any sign of recovery has been affected by the poor performance on the US stock market.

The US share market plunged on Tuesday over the fear of a series of warnings against poor corporate earnings and military activities against Iraq.

The Dow Industrial Average plunged by 189.02 points to 7,681.13, the lowest point in 4 years. Nasdaq and S&P 500 also declined by 0.23% and 1.27% respectively.

Investor sentiment in the U.S. has contracted on the news that the US Federal Open Market Committee decided to maintain interest rate where it is, saying that uncertainties are widespread in the US economy.

Wall Street projects that such a downward trend will continue until the mid October, when corporations release their earnings report for the third quarter.

The tumble on the US stock market is having a ripple effect on stock markets in Asia and Europe. Nikkei index was down by 1.68% in Japan.

Despite a strong yen, the won traded at 1225.5 won, up by 1.8 won from the previous day buoyed by the increase in recent massive sellout of foreign investors.

The price of Dubai oil went up on Tuesday to 27.64 dollars per barrel, the highest level in 22 months as the likelihood of US attack on Iraq became higher. The price of West Texas Intermediate also rose by 0.03 dollars to 30.66 dollars.

lcy@donga.com konihong@donga.com