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KOSPI Falls Below 780

Posted November. 19, 2003 22:44,   

한국어

An unfortunate combination of bad news such as the prosecutors’ slush funds investigations into last year’s presidential campaign and a worldwide decrease in stock prices has caused the Korea Composite Stock Price Index (KOSPI) to drop sharply by as much as 30 points to end the day at less than 780 points on November 19. In particular, due to the prosecutors’ investigation, the stock prices of most of LG Group’s listed and registered affiliate companies have plunged sharply.

On the same day, the Korean Stock Exchange (KSE) in Seoul closed with KOSPI down by 29.27 points (3.65 percent) to 771.70, the lowest level since 761.61 on October 27.

Also, KOSDAQ finished with a KOSDAQ Index of 46.09 points, down by 1.42 points (2.99 percent) from the day before.

The fall in stock prices in the U.S. and Japan is due to the terrorism threats of Al Qaeda, the instability of the international oil price and foreign exchange rates, all on top of the prosecutors’ investigations into the slush funds scandal for last year’s presidential elections. Furthermore, the liquidity problems of credit card companies have come to surface, freezing the investor’s incentive to risk money.

21 out of 22 share prices of LG Group’s listed and registered affiliate companies, directly hit by the slush funds investigation and LG Card’s debt crisis, have dropped sharply. In particular, the shares of the holding company of LG, LG Shopping Co., which was searched with a warrant for seizure by the prosecutors, and LG Card, the origin of the debt crisis, plunged seriously. Other groups, including Kumho and Hanhwa, were put on the prosecutors’ investigation list and saw their share prices decline. Also, the banks and securities companies had their prices depreciate by 5.71 percent and 5.73 percent respectively, reflecting the market’s negative opinion about backing credit card companies.

Meanwhile on the same day, Asian stock prices showed an all-around decline with stock prices of Japan, Taiwan and Singapore markets collectively dropping. Before this occurrence, on November 18 in the U.S., the share prices declined for the fourth straight day (trading days) in a row with NASDAQ Index and Dow Jones Industrial Average falling under 1,900 and 9,700 points, respectively.



Kang-Woon Lee kwoon90@donga.com