Stock Price, Sudden Decline for Two Days

KOSPI slumped for consecutive two days and dropped to 670 points after one month. KOSDAK index also dropped to 48 points decreased by 8.9% for four days.

As of December 24, KOSPI was off to 677.82 points decreased by 13.56 points (1.96%) over the previous day. It was the lowest point after November 19 (671.44 points).

KOSDAQ index was off to 49.03 points decreased by 1.11 points (2.26%).

Unfavorable factors and unbalance of demand and supply brought down the stock price.

A national risk of Korea was raised owing to unfavorable factors such as a possibility of USA-Iraq war and a nuclear issue of North Korea. Also, An investment psychology has been aggravated worse due to prosecuted companies of window dressing in accounting.

A sudden increase of an oil price and foreigners’ purchase of 31 billion won are the main cause of the decline in the stock market.

Also, the funds repurchase of 600 billion won entrusted to the investment trust management by the national pension corporation and Kookmin Bank aggravated the demand and supply.

As foreigners purchased futures of KOSPI 200 Index for over 3,000 contracts until the morning, it protected the decline of the stock market. However, in the afternoon, there was the big decline owing to the selling of 2,840 contracts.

Park Gyeong-min, president of HANgaram Investment Management said, “Because the unfavorable factors are lowly likely to be improved until the end of the year and the new favorable factors can hardly be expected, the stock price could drop more than the expectation.

Chan-Sun Hong hcs@donga.com