“China Shock” Sends Stocks Falling 37 Points

Due to a series of stock price plunges worldwide that began in China on February 27, Korea’s stock prices dropped sharply on February 28.

In Seoul’s stock market on that day, the KOSPI Composite Index fell by over 60 points day-on-day. As the pace of price drop slowed down, however, it closed at 1,417.34 points, down by 37.26 points—or 2.56 percent—from the previous day. The decrease rate of 2.56 percent is the highest since June 13 of last year, when the figure was 2.90 percent.

The KOSDAQ Index also closed at 600.93 points, dropping by 10.59 points (1.73 percent) from the day before.

Right after the opening, in particular, there was a massive share-dump that led stock prices to fall below the 1,400-point mark.

Out of 1,894 stocks listed in the Korea Exchange (KRX) and the KOSDAQ, 72.27 percent of them, or 1,368 items, saw their prices fall. Samsung Electronics (2.41 percent), POSCO (5.23 percent), Kookmin Bank (2.64 percent), KEPCO (1.49 percent) and other stocks with top market capitalization all recorded a significant drop.

As the market capitalization of the Korean stock market decreased from 714.194 trillion won on the previous day to 696.39 trillion won today, as much as 18.155 trillion won disappeared in just one day.

Most Asian stock markets were bearish, with Japan’s Nikkei Stock Average falling by 2.85 percent.

China’s Shanghai Composite Index, which brought about global stock price plunges as it dropped by a whopping 8.8 percent on the previous day, seemed to recover from the shock for the moment as it rose by 3.94 percent on the day. On February 27, the U.S. Dow Jones Indices fell by 3.29 percent and the British FTSE Index by 2.31 percent.

ssoo@donga.com