Pessimism Keeps Markets Down

As mounting concerns over an economic downturn have led to the U.S. stock market crash, Asian stock markets have also tumbled.

Korea’s benchmark KOSPI fell 17.91 points (1.05 percent) to close at 1,686.45 yesterday. The nation’s tech-heavy KOSDAQ index also fell 0.19 percent to 653.12.

The net selling (the amount of selling minus the amount of buying) of foreign and institutional investors reached 249 billion won and 179.8 billion won, respectively. The heavy net selling resulted in a drastic fall in the two indexes.

China’s benchmark Shanghai Composite Index dropped 3.47 percent and Japan’s Nikkei Stock Average Index fell 1.37 percent.

Due to gloomy economic indicators, the U.S. stock market turned downward Thursday local time. The Dow Jones industrial average and the Nasdaq composite index fell 1.15 percent and 1.17 percent, respectively.

The Federal Reserve Bank of Philadelphia announced that the region’s manufacturing index fell from minus 20.9 in January to minus 24 in February, the lowest since October 2001. The index below zero means that the region’s economy is in poor shape. The index has drastically fallen from minus 1.6 in December 2007.

Worse yet, the U.S. index of leading economic indicators also shed 0.1 percent from a month ago in January 2008, falling for the fourth straight month. The index of leading economic indicators is the benchmark to predict future economic conditions. A continuous fall in the index can be understood as a sign that the economy would face an economic slowdown.

ssoo@donga.com