South Korean shares closed 1.35 percent lower on Monday as steep falls in the won fanned worries about local financial markets, amid lingering concerns about the effectiveness of the US rescue package. The KOSPI index fell 19.97 points to 1,456.36. Volume was 344.17 million shares worth 4.9 trillion won (4.13 billion dollars), with losers outpacing gainers 518 to 273.
The Korea index had risen as high as 1,496.30 in the morning on news that US lawmakers are ready to vote on the revised 700 billion dollar rescue package. But it erased early gains following steep falls in the won against the dollar. The US unit ended at 1,188.80 won, its highest closing since January 2004.
"The dollar's rally spurred worries about a potential local liquidity crunch, amid lingering concerns about potential losses in foreign exchange hedging products which many local companies are currently locked into," Lee Kyung-Soo, an analyst at Taurus Investment and Securities, told Dow Jones Newswires. Investors also worried about the effectiveness of the US bailout plan and the spread of the financial crisis into other regions, said Lee Jae-Mahn, an analyst at Tong Yang Securities who noted US stock futures were quoted lower. Banks were hit hard by worries about local financial markets.
Woori Finance Holdings lost 4.4 percent to 11,850 won and Hana Financial Holdings declined 6.8 percent to 27,600. The won's sharp fall weighed on airlines. Korean Air fell 3.7 percent to 37,900 won and Asiana Airlines lost 2.6 percent to 4,320. Refiners also fell on worries about rising oil import prices following steep falls in the local currency. SK Energy declined 5 percent to 92,000 won. Deepening concerns about the global slowdown hurt export-driven technology companies, shippers and shipbuilders.
Hanjin Shipping fell 3.2 percent to 26,950 won, Hyundai Heavy Industries declined 3.7 percent to 271,000 and Samsung Electronics lost 1.6 percent to 544,000.
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