Stock Market Rally

The stock market made a sharp decline in just one day and slipped below the 800-level. The won-to-dollar exchange rate is also on the rise (decreasing won value), and the financial market is again facing insecurity.

The Composite Stock Price Index of the Korean stock market fell 26.96 points (3.3 percent) from the previous day, closing at 790.13 on Thursday and marked the lowest record this year. Samsung Electronics skidded 3.43 percent, closing the trade at 507,000 won.

This downward trend of stock prices is attributed to the dampening of sentiments due to the highest record of international oil prices in 14 years and the mixed signals in the U.S. stock market.

In particular, foreigners sold more than 8,000 contracts in the futures market but bought 114.6 billion won worth of stocks in the spot (stock) market and show mixed trading.

Experts on the stock market explained that this form of trading by foreigners indicates that they see Korean stock market with that much uncertainty.

Asian stocks also plunged this day. Japan’s Nikkei average fell 2.95 percent and the 10,900 yen level crumbled. Taiwan’s weighted average also tumbled 0.68 percent and due to the impact of high oil prices, overall Asian stock market showed signs of weakness.

Meanwhile, the won-dollar exchange rate in Seoul foreign exchange market rose 4.1 won from yesterday, closing at 1185.6 won per dollar. This is due to an exodus of foreigner’s stock investment capital and the strong dollar.

“There is a possibility that the won-to-dollar exchange rate will increase up to 1200 won level,” observed Koo Kil-mo, director of Foreign Exchange Bank.

Kang-Woon Lee Joong-Hyun Park kwoon90@donga.com sanjuck@donga.com