Global equity rout deepens; Korean market extends losses

The benchmark Kospi dropped nearly one-and-a-half
percent… and the secondary bourse took a beating… activating a mechanism similar
to the Chinese market’s circuit breakers. Hwang Ji-hye reports.
Korea’s tech-heavy KOSDAQ saw shares nosedive just before lunch, shedding as much as eight
percent at one point on Friday. This triggered a side car, which is a circuit
breaker that suspends share transactions for one minute.
The bourse closed down six percent. Korea’s benchmark KOSPI also ended one-point-4
percent lower, continuing its downward streak after one of the country’s biggest national
holidays Lunar New Year. Over in Japan… the Nikkei closed down over
five percent… dropping below the psychologically important 15-thousand mark.
All this… comes after the S&P 500 overnight fell one-point-2 percent to its lowest close
in almost two years… and down over 10 percent for the year.
The global equity rout has been prompted by the slowdown in China as well as measly demand
and wobbly performance in other emerging markets… on the back of faltering crude oil prices.
Sentiment this week was further subdued… after U.S. Fed chair Janet Yellen expressed
concerns about the U.S. economy. Worries also linger… over how monetary easing
policies of central banks will impact markets down the line.
The Bank of Japan in addition to the European Central Bank has introduced negative interest
rates… and investors are concerned that policymakers will have less wiggle room in
a protracted downturn and the bottom line of banks will be challenged.
Financial shares actually led the recent losses in world markets.
With that… some are worried about the possibility of a major financial crisis… like the one
back in 2008,… but not everyone expects those conditions to resurface. “Financial institutions are in better shape
in terms of financial health compared to the past and that means it can handle more losses.” Still, experts in general do agree that policymakers
should keep a close eye on the situation… as nothing is really foreseeable in times
like now. Hwang Ji-hye, Arirang News.

Stephen Childs

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