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Korea stocks suffer biggest one-day point drop

SEOUL: South Korean stocks suffered their biggest one-day point drop ever on Wednesday as sharp overnight declines on Wall Street triggered a selloff of blue chips led by telecom stocks, analysts said.

The Korea Composite Stock Price Index.closed down 72.73 points or 6.87 percent at 986.31.

"The overnight decline of the US stock market triggered investors to sell and the worst hit were those that outperformed the market last month, such as telecommunications stocks," said Paulo Rhee, deputy head of research at HSBC Securities.

"Historically, such external shocks trigger investors to dump shares. But it's not going to last for more than a couple of days," Rhee said.

The KOSPI came rolling out of 1999 more than 80 percent up on the year, with telecommunications and Internet-related stocks some of the biggest winners last year.

Analysts said on Wednesday local investors, most of whom are short-term players, took profits in a market that has proven susceptible to selloffs when it tops the 1,000 point level.

"The overnight decline of the Nasdaq provided the straw to break the camel's back," said Terence Lim, head of research at Merrill Lynch.

SK Telecom was the biggest net loser, shedding 570,000 won or 15 percent, the market's daily limit, to 3.23 million won.

Dacom, another telecom leader, dropped 74,500 won or 14.96 percent to 423,500 won.

Samsung Electronics shares dropped 26,500 won or 8.67 percent to 279,000 won, one day after posting the market's biggest net gains. Analysts said small cap shares were less affected by the day's tumble, largely because local investors rotated funds into pharmaceuticals, basic metals and paper product shares.

"Investors locked in profits from blue chips and rotated buying into value shares," said Lee Kye-joon, a strategist at Daishin Securities.

Samjin Pharmaceutical the biggest net gainer in the morning session, jumped 8,900 won or 13.64 percent to end at 68,700 won.

Daewoong Pharmaceutical gained 1,600 won or 14.81 percent to close at 12,400 won. In the broader market, trade volume totalled 257.7 million shares, compared to 194.73 million in Tuesday's shortened day.

Trade was valued at 4.8 trillion won compared to 3.75 trillion won on Tuesday.

Foreign investors sold a net 112.8 billion won worth of shares while institutional investors sold a net 43.2 billion won.

Individual investors bought a net 89.7 billion won.

Decliners outpaced advancing issues 469 to 384 with 33 shares unchanged.

The March futures on the 200 index O KS: closed down 9.9 points at 126.3, while the underlying spot index .ended down 9.8 points at 123.86.

Seoul's over-the-counter Kosdaq .index dropped 3.05 points or 1.15 percent to 262.95 on the back of overnight dive on the US Nasdaq composite index.

The Nasdaq suffered its worst one-day point fall on Tuesday, shedding 229.46 points or 5.55 percent to end at 3,901.69.-Reuters