Stocks Hit 14-Month Low

The U.S. financial crisis has sent Korea’s benchmark stock index to a 14-month low.

The KOSPI yesterday fell 49.29 points (3.16 percent) to close at 1,509.33, the lowest this year since finishing at 1,519.33 Wednesday last week. The market yesterday also dipped to as low as 1,506.41 at one point.

Yesterday’s close was also the lowest since April 19 last year, when the KOSPI fell to 1,513.66.

The tech-heavy KOSDAQ index also fell 18.10 points (3.34 percent) to close at 523.02.

Other Asian stock markets also tumbled. Japan’s Nikkei Stock Average fell 255.60 points (1.96 percent) to 12,754.56, and China’s benchmark Shanghai Composite Index dropped 98.81 points (3.43 percent) to close at 2,779.45.

The Taiwan Stock Exchange plunged 4.51 percent and the Hang Seng Index of Hong Kong 3.81 percent.

In Korea, the stock plunge was fueled by the 27th straight day of foreign net selling. Yesterday, their net sales reached 243.6 billion won on the KOSPI.

Between June 9 and yesterday, foreign investors sold Korean stocks worth 7.54 trillion won on the KOSPI.

Seong Jin-gyeong, head of market strategy at Daeshin Securities, said, “(Domestic) stock prices have been more affected by external factors, including the U.S. subprime mortgage loan crisis, than by domestic factors.”

“Market uncertainty is expected to continue as the aftermath of the U.S. subprime crisis is likely to spread to commercial banks.”

jefflee@donga.com