South Korean stocks closed 1.84 percent lower Monday as Spain’s call for a rescue fund spurred a new wave of fears that the eurozone debt crisis is deepening, analysts said. The local currency fell against the U.S. dollar.
The benchmark Korea Composite Stock Price Index plunged 33.48 points to finish at 1,789.45. Trading volume was moderate at 491.3 million shares worth 3.55 trillion won ($ 310.5 million), with decliners far outstripping gainers 676 to 155.
“Investors are unnerved by Spain because it resembles how the 2008 crisis started to unfold ― the regional financial institutions went bust first, asking for help,” said Bae Sung-young, an analyst at Hyundai Securities Co.
The regional government of Valencia in Spain signaled Friday that it could request a bailout fund from its central government to repay debts worth 2.8 billion euros ($3.39 billion).
U.S. and European stock markets closed bearish after the news, as fear of a possible rescue domino over the debt-mired eurozone overshadowed investor sentiment.
“But the size of the debts is not near that of the U.S. four years ago. As long as Spain prevents the contagion from being spread to other areas, the impact won’t be huge,” Bae added.
Chemical firms and brokerages led the tumble. Leading chemical maker LG Chem plummeted 4.13 percent to 302,000 won and Samsung Securities slid 2.19 percent to 46,950 won.
Blue chips also lost ground, with tech behemoth Samsung Electronics retreating 2.43 percent to 1,162,000 won and the world’s largest shipyard Hyundai Heavy Industries tumbling 3.32 percent to 218,500 won.
Financial shares finished in negative territory, with No. 2 lender KB Financial and fourth-largest Shinhan Financial extending their losing streak to a fourth consecutive session amid the antitrust watchdog’s ongoing investigation into suspected rigging of rates on certificates of deposit.
In contrast, telecom and utility issues gathered ground. SK Telecom rose 1.53 percent to 133,000 won and state-run Korea Gas climbed 1.58 percent to 25,150 won.
The local currency ended at 1,146.60 won against the greenback, down 5.4 won from Friday’s close, as investors sought to sell off their share holdings on resumed eurozone jitters, dealers said.
(Yonhap News)
