The Korea Herald


Seoul shares open lower


Published : Aug. 8, 2011 - 09:43

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Korean shares opened down 1.4 percent Monday following last week's market turmoil and the downgrade to the United States' credit rating by Standard & Poor's.

The weak start came even after the Group of Seven nations said they were committed to taking coordinated action to ensure liquidity and to support financial market functioning, financial stability and economic growth.

The benchmark KOSPI index was down 27.18 points at 1,916.57 at the open, but it made up ground and had declined 0.5 percent 18 minutes after trading began.

The stock market fall pushed the won lower. It was trading at 1,070 to the dollar as of 9:05 a.m., down 2.6 won from Friday's close.

The Korea Exchange, the operator of Korea's stock markets, said before the market opened Monday that it would consider countermeasures to any sharp drop in share prices. It gave no details.

On Sunday, Korean policymakers tried to contain the impact from the U.S. rating cut and the European debt crisis amid growing concerns over the domestic markets’ vulnerability to external uncertainties.

Senior officials from the Finance Ministry, the Bank of Korea and the Financial Supervisory Service held an emergency meeting one day after Standard and Poor’s downgraded the U.S.’s debt rating from AAA to AA+.

“There is no reason for the market to overreact,” Vice Finance Minister Yim Jong-ryong said during the rare Sunday meeting, citing the economy’s financial soundness and ample foreign exchange reserves.

“The external instability should have limited impact on the domestic economy.”  

During the meeting the officials agreed on the need for preemptive measures to stabilize the markets.

“We need to consider policies to ensure that timely measures are taken to reduce excessive volatility stemming from external shocks and stabilize investor sentiment,” he said.

Korea has the world’s seventh largest foreign reserves, of which over 60 percent is denominated in the U.S. dollar.  (From news reports)