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KOSPI could fall further on external uncertainties: experts

All Headlines 11:23 October 12, 2018

SEOUL, Oct. 12 (Yonhap) -- South Korea's main stock index could come under downward pressure for the time being due to unfriendly market factors such as U.S. rate hikes, analysts said Friday.

On Thursday, the benchmark KOSPI nosedived 4.44 percent, or 98.84 points, to close at 2,129.27, its lowest level since April last year. The decline was also the largest daily drop in more than seven years.

The fall is attributable to persistent woes over trade friction between the U.S. and China and concerns over rate rises in the U.S., according to analysts. Investors have also been leery of slowing global growth.

"Now, things are quite similar to the times when macroeconomic factors faltered," said Kim Dae-joon, an expert at Korea Investment & Securities, citing the serious market downturn in 2009 after the global financial crisis, in 2011 when the credit rating for the U.S. was cut and in 2012 when the European financial crisis had global ripple effects.

Citing his calculation based upon the KOSPI's price book-value ratio (PBR), which now stands at 0.94, the expert said, "Even a small, single factor could shake the market, and the index would hit a bottom of 2,040."

Huh Jae-hwan, an expert at Eugene Investment & Securities, said the recent drop in the global equities market, including in South Korea, reveals that investors' confidence in stocks have been shaken.

"Particularly worrisome is that the KOSPI failed to make a rebound though it has been slashed a bit excessively this year," the analyst said. Compared to the yearly high logged in January, the index has plunged around 18 percent.

Such a market correction would continue and the benchmark index would be locked in a tight box range, Huh said, dismissing the chances of a free fall. "It is too much to say that current market uncertainties would lead to major financial meltdown any time soon."

As of 10:30 a.m. on Friday, the KOSPI had added 0.74 percent to trade at 2,145.35.

KOSPI could fall further on external uncertainties: experts - 1

graceoh@yna.co.kr
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