KOSPI Shares Seen Lower on Monday

Sun. June 22, 2008; Posted: 05:20 PM

(RTTNews) - The South Korean stock market has finished lower in three of the last four sessions, shedding nearly 30 points or 1.7 percent on its latest skid, and that trend is unlikely to change on Monday, analysts say. The domestic situation has improved after the settlement of beef imports from the United States, and many of the multi-week strikes and rallies have subsided - but the foreign cues remain troubling.

The global market paints a generally gloomy picture for Asian bourses. There was more bad news out of the U.S. financial sector on Friday, which is expected to drag down banking stocks across the region on Monday. The price of oil rebounded to the upside after a sharp drop on Thursday, adding negative sentiment. Also, investors are likely to be cautious ahead of Tuesday's FOMC meeting as it is becoming increasingly likely that the Federal Reserve will hike interest rates before the year's end.

The KOSPI finished modestly lower on Friday, as solid gains from the morning session were erased by profit takers in the afternoon. Financials were lower, as were refinery and technology stocks as the market ended the week down by 0.9 percent. The KOSPI now sits at its lowest closing level since April 1.

For the day, the index lost 9.72 points or 0.6 percent to close at 1,731.00 after trading between 1,723.41 and 1,755.60. Volume was 322 million shares worth 4.2 trillion won. There were 413 decliners and 365 gainers, with 105 stocks remaining unchanged.

Among the decliners, Kookmin Bank fell 0.8 percent, while Woori Finance Holdings dipped 1.4 percent, Hana Financial Group lost 1.1 percent, LG Electronics dropped 0.8 percent, LG Display was down 1.6 percent, Hankook Tire was off 2.3 percent, SK Energy slid 4.4 percent and S-Oil was off 3.8 percent. Bucking the trend, Dongwon F&B closed up 3.0 percent and POSCO inched up 0.2 percent.

Wall Street provides a sharply negative lead after stocks ended Friday's session with significant losses as investors dealt with negative news within the financial sector. Analysts at Merrill Lynch reportedly slashed their earnings outlooks on several large regional banks, stating that they will have to cut dividends and continue to boost loss reserves. Additionally, Moody's Investor Services cut its ratings on Ambac Financial Group and MBIA, citing their impaired ability to raise capital and write new business.

While investors grappled with the credit crisis, they also had to deal with soaring energy prices. Oil closed higher, reclaiming some of its sharp loss from Thursday's session. Light sweet crude ended the day at $134.62 a barrel, up $2.69 on the session. Crude oil dropped $4.75 a barrel on Thursday after China said it would boost prices of retail gasoline and diesel prices, leading to speculation that demand could diminish.

The major averages ended the session with substantial losses, with the Dow closing below the physiological 12,000 mark for the first time since mid-March. The Dow closed own 220.40 points or 1.8 percent at 11,842.69, the Nasdaq closed down 55.97 points or 2.3 percent at 2,406.09 and the S&P 500 closed down 24.90 points or 1.9 percent at 1,317.93.

With the losses on Friday, the major averages all showed notable declines for the week. The Dow showed a 3.8 percent weekly decline, while the Nasdaq and the S&P 500 posted weekly losses of 2 percent and 3.1 percent, respectively.

In economic news, South Korea will provide consumer confidence data for the second quarter on Monday, with forecasts calling for the index to ease to a score of 99 from 105 in the previous quarter.

Also, South Korea and the United States on Saturday agreed to a new deal that would see Seoul resume imports of American beef, but only from cattle under the age of 30 months. That ends a ban that had been in place since October over fears of mad cow disease, when bones were discovered in a shipment of U.S. beef. South Korean President Lee Myung-bak tried to scrap the ban entirely in April, but that became a flashpoint for protest rallies and strikes, prompting this weekend's revision.

Finally, South Korean truckers returned to work on Sunday after their trade unions and an association of local container companies agreed on a 19 percent increase in freight hauling fees, according to media reports. According to the Ministry of Land, Transport and Maritime Affairs, more than 94 percent of striking truckers have resumed their work as of Sunday afternoon. A week earlier, more than 13,000 workers of the Korea Cargo Worker Union walked off the job, demanding the government take measures to ease their financial woes arising from soaring fuel prices.

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