Seoul shares plunge on panic selling

SEOUL, Oct. 10 (Yonhap) -- South Korean stocks tumbled more than 7 percent late Friday morning on concerns that global moves to cut rates would not be enough to ward off a global economic recession, analysts said.

The benchmark Korea Composite Stock Price Index (KOSPI) plummeted 95.98 points,
or 7.41 percent, to 1,198.91 as of 11:20 a.m.
"Investors are dumping shares, gripped by panic. Growing concerns that globally
coordinated rate cuts would not head off a global economic recession chilled
investor sentiment," said Lee Sun-yup, an analyst at Goodmorning Shinhan
Securities Co.
Steep losses caused the Korea Exchange (KRX), the bourse operator, to suspend
program trading at 9:06 a.m for five minutes after the main index's futures
prices fell more than 5 percent. Heavy selling prompted the key stock index to
fall below the 1,200-point level.
The move to suspend trading was the fifth time that the KRX has activated a
so-called sidecar this year.
On Thursday, South Korea's central bank, the Bank of Korea (BOK), slashed its key
interest rate by 0.25 percentage point to 5 percent to soothe global financial
turmoil and stem the drastic slowdown of the local economy. The rate reduction by
the BOK came less than a day after global central banks, led by the U.S. Federal
Reserve, took coordinated rate cuts.
But despite the cuts, U.S. markets tumbled on Thursday on global economic
recession fears. The Dow Jones industrial average plunged 7.33 percent and the
tech-dominated Nasdaq composite index dipped 5.47 percent. It was the first time
in about five years that the Dow fell below 9,000.
Most shares traded in negative territory. Market leader Samsung Electronics
declined 4.99 percent and top steelmaker POSCO plunged 9.19 percent.
Financial shares took a beating amid the deepening global financial rout. Shares
of KB Financial Group, Kookmin Bank's holding company, tumbled 14.64 percent on
its first day of trading on the main bourse.
The local currency was trading at 1,396 won to the U.S. dollar as of 11:20 a.m.,
down 16.5 won from Thursday's close, amid volatile trading as offshore investors
unloaded local stocks, dealers said. The Korean currency fell to 1,460 won at one
point in the morning session.
South Korea's foreign exchange market has been suffering from a dollar shortage
as banks and companies are scrambling to hoard the safer greenback on concerns of
a financial crisis sparked by the collapse of investment bank Lehman Brothers
Holdings Inc.