Posted February. 06, 2010 08:16,
The Korean stock market and currency yesterday took a hit in the wake of the Southern Europe financial crisis originating in Greece.
The worsening fiscal deficits of Portugal, Italy, Ireland, Greece, and Spain, which are collectively called "PIIGS," sent world stock markets tumbling yesterday.
President Lee Myung-bak said, The difficulties of Greece, Ireland, Italy and Spain will also affect European and Asian nations including Korea.
With Greeces debt default feared to spread to other European nations, stock markets across the continent fell in unison and negatively affected the U.S. and Asian markets.
The Korea Exchange said the benchmark stock index KOSPI fell 3.05 percent (49.30 points) to close at 1,567.12 and the tech-heavy KOSDAQ dropped 3.65 percent to close at 497.37. The KOSPI`s finish was the lowest since Nov. 30 last year, when it plunged to 1,555.60 shortly after Dubai World of the United Arab Emirates sought a debt moratorium.
The won`s value also fell 19 points to finish at 1,169.9 against the dollar, the biggest drop since a fall of 20.2 points Nov. 27 last year. In intra-day trading, the exchange rate even hit 1,177.5, surpassing the previous annual high of 1,174.8.
The European crisis also led to falls in other Asian markets, with Japans Nikkei falling 2.89 percent, Chinas Shanghai Composite Index 1.87 percent, Hong Kongs Hang Seng 4.08 percent, and Taiwans Taiex 4.30 percent.
European bourses also suffered, with the U.Ks FTSE 100 dropping 2.17 percent, Germanys DAX 2.45 percent, and Frances CAC40 2.75 percent.
The U.S. Dow Jones Industrial Average fell 2.61 percent to close at 10,002.18, but once sank below the 10,000 mark in intra-day trading for the first time since Nov. 6 last year.
Investor confidence has taken a major hit due to reemerging fears over a national default by Greece. In addition, the announcement by the largest Greek trade union to start a general strike Wednesday also contributed to the fall in global stock markets.
Park Sang-hyeon, an analyst at HI Investment & Securities in Seoul, said, World financial markets have been shattered by worries over a large-scale financial crisis originating from Europe. As the U.S. has imposed regulations on large financial institutions to reduce liquidity, stock markets and raw material prices will face significant adjustment pressure.