Stock Prices Plunge Both at Home and Abroad

Stock prices plunged both at home and abroad due to concern about the unstable U.S. mortgage market and a possibility that China might raise interest rates.

The sluggish economy of the U.S. and China, which are Korea’s largest export markets, could lead to a decline in Korean exports and slow the Korean economy.

The Seoul stock exchange closed lower on Wednesday. The benchmark KOSPI Index fell 28.68 points (2 percent) to 1,407.37. The Kosdaq Index dropped 7.10 points (1.14 percent) to 613.31.

Asian stock prices fell all together. The Nikkei Index, Shanghai Index, Taiwan Capitalization Weighted Stock Index and Hong Kong’s Hang Seng index plunged 2.92 percent, 1.97 percent, 1.48 percent, and 2.57 percent, respectively.

Bad news that the New Century Financial Corporation, the second largest sub-prime mortgage finance company in the U.S., filed for bankruptcy on March 13 (local time), increased concerns over a weak mortgage market and dealt a serious blow to Asian stock markets.

The Dow Jones Industrial Average Index sank 1.97 percent while the NASDAQ Composite Index fell 2.15 percent.

In particular, Chinese stock prices nose-dived nearly 3 percent once on Wednesday during the day due to concerns that the Chinese financial authorities might raise interest rates to stabilize consumer prices.

ssoo@donga.com orionha@donga.com