Thursday December 11, 12:45 am Eastern Time
FOCUS-S.Korea markets despair as crisis deepens
By Jaekwon Lim
SEOUL, Dec 11 (Reuters) - South Korea's desperate effort to regain foreign confidence failed to
ignite buying interest in the country's stock market as the Korean won continued its plunge on
Thursday, dealers said.
Currency trading again came to a halt in the first few minutes after the won plunged to its 10 percent
daily lower limit of 1,719.8 to the dollar. The stock market slumped more than 5 percent.
In a nationwide address, South Korean President Kim Young-sam took the blame for the economic
crisis.
"I cannot find the right words to apologise," he said.
Traders shuddered as they watched the stock market tumble and the won being abandoned.
''I am really scared,'' said one trader at Dongsuh Securities. ''The mayhem will go on and on.''
An executive at a local brokerage firm added: ''It's a massacre. Even the country's president is
helpless.''
Kim's words were buried by the panic that dominated South Korean markets. The composite stock
price index closed the morning session down 4.71 percent at 381.03 amid broad sell-offs. The
previous yearly low was 356.82 registered on December 3.
The plunge in the won means the South Korean unit has lost 51 percent of its value against the dollar
so far this year.
''If the government lets the market as it is, the dollar will head for 2,000 on Monday,'' a foreign bank
dealer said. ''But it has run out of ammunition.''
South Korea's desperate quest for dollars led it to open 50 percent of its equity market to foreign
investment on Thursday, four days earlier than expected. But foreign buyers were almost
non-existent with blue chips battered by heavy selling instead.
''The enormous risk of the Korean currency is scaring off even the most daring investors,'' said Oh
Yon-suk, a director of Hannuri Investment & Securities.
Traders voiced their increasing frustration over the government's handling of the crisis.
''The government's idea to move up the market-opening schedule to Thursday from next Monday
was accepted by foreign investors as another Korean joke,'' said a broker at Daewoo Securities.
That meant even one day was an eternity to South Korea with its dollar reserves running on empty,
brokers said.
''South Korea's country risk is in sharp focus with every foreign investor and their feeling is that the
situation could become worse,'' said the Daewoo broker.
South Korean credit ratings were also hit. Overnight, Moody's Investors Service lowered South
Korea's foreign debt currency ceiling, while downgrading the ratings of 31 Korean issuers.
Traders said South Korea was caught in a vicious circle with the currency crisis driving away foreign
investors despite the allure of a cheap and now open stock market.
''As long as the won doesn't recover, foreign funds will not flow in,'' said Wang Jang-sik, a broker at
Shin Young Securities.
The situation has been little changed in the South Korean debt market with no trading seen in
benchmark corporate bonds even at 25.53 percent yields, unchanged from Wednesday. |
