Seoul shares plunge 3.82 pct on U.S. downgrade

SEOUL, Aug. 8 (Yonhap) -- South Korean stocks nosedived 3.82 percent on Monday as the first ever downgrade of U.S. credit and jitters over a global economic recession sparked panic selling. The local currency plunged against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) tumbled 74.3 points to a 10-month low of 1,869.45. Trading volume was heavy at 564.8 million shares worth 10.7 trillion won (US$9.9 billion), with losers far outnumbering gainers 835 to 62.
At one point, the key index crashed as much as 7.4 percent, but clawed back some of its losses in later trading.
"The U.S. credit rating downgrade sparked a retail sell-off," said Park So-yeon, an analyst at Korea Investment & Securities Co. "Institutions snapped up shares while foreigners slowed down on their selling."
On Friday, Standard & Poor's downgraded its credit rating of the United States by one notch from AAA to AA+, citing concerns over its sovereign debt and its ability to handle those debts.
"A large part of the selling seems to be due to psychological factors. In the long term, we have to keep an eye on policymakers' efforts to craft a resolution," she said.
Retail investors offloaded a net 737.6 billion worth of shares on the KOSPI, while foreigners sold a net 83.2 billion won.
"The sharp fall came as panic swept through retail investors, triggering a massive sell-off," said Kwak Joong-bo, an analyst at Samsung Securities Co.
The massive sell-off resulted in temporary halts of trading. The Korea Exchange, the bourse operator, suspended program trading on the main stock exchange for five minutes after the KOSPI 200 futures nosedived more than 5 percent for more than one minute. It also halted trading on the secondary KOSDAQ after the index plunged more than 10 percent for more than one minute.
Shares lost ground across the board, with blue chips leading the decline. Samsung Electronics, the world's top memory chip maker, slumped 3.68 percent to 760,000 won and its smaller rival Hynix Semiconductor plunged 7.22 percent to 21,850 won.
Financials also ended bearish on grim market prospects. KB Financial Group, the country's No.2 banking group, lost 7.53 percent to 43,600 won and Mirae Asset Securities nosedived 10.6 percent to 42,600 won.
The local currency closed at 1,082.5 won to the greenback, down 15.1 won from Friday's close, as foreign investors continued to sell local shares for the fifth straight session, dealers said.
mil@yna.co.kr