Stocks Fall After China Interest Hike

Korean stocks plunged after China’s announcement of its interest rate hikes. Major Asian stocks, including the Tokyo stock market, also experienced a radical downturn thanks to the announcement.

The benchmark Korea Composite Stock Price Index (KOSPI) dropped 32.80 points or 2.26 percent to end at 1419.73 won. The KOSDAQ market also fell 7.93 points or 1.14 percent to finish at 685.44 won. Concerns that the radical hike in interest rates will lead to a downturn in the Chinese economy led to the plunge in the stock market. Investment was also weak due to the Hyundai-Kia Motors Group incident, where foreign and institutional investors launched into a selling spree, contributing to the plunge.

The rate of equity sales by foreign investors and institutions amounted to 189.7 billion won and 193.4 billion won each.

Expected to take the full blow should the Chinese economy experience a downturn, POSCO’s stocks fell 4.36 percent, while stocks of Doosan Infracore, which has a high percentage of exports to China, plunged 9.95 percent.

The price of Samsung Electronics stocks also dropped 3.01 percent, while high-priced equities also struggled. Hyundai Mobis stocks of the Hyundai Motors Group also plunged 4.14 percent.

Asian stocks faced a concurrent floundering in the markets. The Nikkei average stocks in the Tokyo equity market fell 208.31 yen, or 1.22 percent, while most Asian equities dropped 0.5 to 1 percent.

Wan-Bae Lee roryrery@donga.com