Seoul stocks crash to 8 1/2-year low on virus panic selling, Korean won at 4-year low

SEOUL, Mar 13, 2020, Yonhap. South Korea’s financial markets were thrown into turmoil on Friday under growing panic sell-offs, with the benchmark stock index plunging over 8 percent to an 8 1/2-year low and the Korean won trading at a 4-year low against the U.S. dollar, as investors rushed to sell risky assets amid growing concerns over economic fallout from the new coronavirus outbreak, Yonhap reported.

The benchmark Korea Composite Stock Price (KOSPI) Index extended losses to surrender 149.25 points, or 8.14 percent, to 1,685.08 as of 11:10 a.m.

The secondary Kosdaq market also tumbled by more than 12 percent.

Trading in the main KOSPI and the secondary KOSDAQ markets was briefly halted after they opened sharply lower.

The country’s financial authorities stepped in to curb sharp volatility in the financial markets, vowing to take necessary measures against one-sided moves.

The Bank of Korea’s (BOK) rate-setting board members mulls an option to hold a meeting for a potential rate cut. The Ministry of Economy and Finance warned that it would intervene into the currency market to stem fluctuations.

“We are planning to actively use policy measures to stabilize the financial market as the volatility in the local financial and foreign exchange markets is expanding due to the impact from the spread of COVID-19,” the central bank said after an emergency meeting.

The finance ministry said the government will carry out market-stabilizing measures if necessary.

Foreigners continued to sell stocks after dumping 4.6 trillion won worth of stocks in the past six sessions. They sold a net 516 billion won worth of stocks, offsetting individuals’ stock purchases valued at 494 billion won.

The KOSPI plunge came as investors assessed that the U.S. ban on travel from Europe and the planned coronavirus stimulus package won’t be enough to counter the virus’ impact on the economy.

The main index already plunged 6.6 percent in the past two sessions as investors dumped risky assets amid concerns that the spread of the coronavirus may end up in a much-dreaded recession.

On Thursday (local time), the Dow Jones Industrial Average lost around 10 percent to 21,200.62 points in its worst daily plunge since 1987. The tech-heavy NASDAQ plummeted 9.4 percent to 7,201.80.

Analysts said lack of clarity from the planned U.S. measures to cushion the economic pain of the novel coronavirus and its rapid spread across the globe look set to further add unease to the financial markets.

“It appears to be another panic selling as investors are more concerned that the U.S. and other governments may not execute their stimulus packages to counter the virus’ economic impact in the right time,” Mirae Asset Daewoo analyst Park Hee-cheol said.

In an address to the nation Wednesday (local time), U.S. President Donald Trump made a shock announcement to ban travel from Europe, except for Britain, for 30 days, while not providing a detailed U.S. economic rescue package.

Further weighing on investor sentiment is the World Health Organization’s declaration of the coronavirus as a pandemic.

Most large-cap stocks plunged across the board.

Market bellwether Samsung Electronics Co. plunged 6.5 percent, No. 2 chipmaker SK hynix Inc. declined 7.1 percent, leading wireless services provider SK Telecom Co. shed 8.5 percent, and top carmaker Hyundai Motor Co. dropped 11.6 percent.

The local currency was trading at 1,224.65 won against the U.S. dollar, down 18.15 won from the previous session’s close.