SEOUL (Thomson Financial) - South Korean shares are expected to open lower
on Monday, with Wall Street's plunge on Friday due to Bear Stearns' liquidity
crisis likely to raise fears among local investors that the worst of the credit
crisis is not over.
The Dow Jones industrial average fell nearly 200 points on Friday after Bear
Stearns confessed that it faced liquidity problems, rekindling worries that the
credit market crisis is far from being resolved despite sizable rescue packages
by central banks around the world.
After days of denying that it had liquidity problems, Bear Stearns was
forced into a JPMorgan-led, government-backed bailout on Friday.
The rescue arrangement, the first of its kind since the 1930s, resulted in
Bear Stearns getting a 28-day loan from JPMorgan with the government's guarantee
that JPMorgan would not suffer any losses on the deal.
Investors may find some solace if the US Federal Reserve delivers another
big interest rate cut, of 50 basis points or more, at the Federal Open Market
Committee meeting on Tuesday.
"The Bear Stearns' near meltdown should set off an alarm bell here as well,"
said Park Sang-Hyun, an analyst at CJ Investment & Securities.
The KOSPI closed down 15.36 points or 1.0 percent at 1,600.26 on Friday. The
index fell 3.8 percent for the week.
Foreign investors were net sellers of shares worth 283.8 billion won, while
institutions were net buyers of 78.7 billion won in shares and retail investors
were net buyers of 131.5 billion won in shares.
The yield on the three-year state bond closed down 0.02 percentage points at
5.25 percent and the yield on the three-year corporate bond ended down 0.03
percentage points at 6.21 percent.
(1 US dollar = 997.3 won)
eunkyung.seo@thomson.com
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