Stock Market Closes Below 1,800

The benchmark KOSPI yesterday fell below 1,800 due to economic uncertainty over the U.S. economy.

The stock market fell 42.51 points (2.33 percent) to close at 1,787.27, its first finish under 1,800 since November 23 last year.

Though the index increased 19.79 points in early morning trading, it spiraled downward at the close due to selling by institutions and foreign investors. News that American investment bank Merrill Lynch will suffer worse-than-expected losses from the subprime mortgage crisis caused the KOSPI to fall further.

The New York Times said Merrill Lynch will write down 15 billion U.S. dollars due to losses tied to mortgage investments, far higher than analysts’ estimate of 12 billion dollars. The bank will release its fourth-quarter performance Thursday.

Samsung Securities researcher Hwang Keum-dan said, “The loss related to the U.S. subprime mortgage loan crisis appears worse than expected. It has seriously chilled investor confidence.”

Lee Jong-wu, head of research at Kyobo Securities, said, “The KOSPI’s fall to below the 1,800 mark means Korea’s stock market will begin a serious correction. Stocks are not expected to get out of this slump for the rest of the year.”

In Japan, the Nikkei fell 277.32 yen (1.93 percent) from Thursday to close at 14,110.79 yen, the lowest in 26 months.

ssoo@donga.com aryssong@donga.com