Stock Market Drops Due to N.K. Nuclear Issue, SARS

Due to the recent uncertain news concerning the North Korean nuclear stand-off and the spread of SARS, the KOSPI dropped to 560 points on Friday. The won-dollar exchange rate soared to 1237.8 won (meaning a depreciation in the won), giving a negative jolt to the domestic financial market.

On April 25, the KOSPI ended at 566.63 points, down by 21.72 points (3.69 percent) from the previous day. The KOSPI index has gone down by a whopping 58.14 points (9.3 percent) in the past five days closing at the 560 level in thirteen business days. The KOSDAQ also dropped by 2.16 points (5.02 percent) to close at 40.89, down by 4.57 points (10.1 percent) in the past four days.

Following gloomy news about the possibility of North Korea actually having nuclear weapons, it is reported that the credit-rating company Standard & Poor`s might need to lower Korea`s national credit rating. With the report, the Korean stock market is suffering from massive sell-offs by foreigners, at 116.4 billion won on the exchange market and 11.7 billion won on the KOSDAQ. Another major factor for the significant drop in the stock market was the flood of money withdrawn by customers. In the previous four days, some 529.5 billion won was pulled from financial institutions.

The won-dollar exchange rate stood at 1237.8 won on April 25, up by 17.4 compared to the previous day. This is its highest ever since April 9.

Japan`s Nikkei Average closed at 7,699.50 yen, down by 155.07 yen (1.97 percent), dropping below the 7,700 yen-level in two decades. Taiwan`s Jia Quian Index also slid 3.23 percent, closing at 4,233.54.

Chan-Sun Hong hcs@donga.com