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Korea stocks close down on heavy program sales

SEOUL: South Korean stocks plunged on Wednesday ending down over four percent as futures-linked program sales targeted blue-chip stocks, analysts said.

The Korea Composite Stock Price Index closed down 42.75 points or 4.36 percent at 938.78.

Kospi's nosedive and weak March Nasdaq 100 index futures threw cold water on the over-the-counter market Kosdaq, analysts said.

The Kosdaq was down 18.93 points or 8.95 percent to 192.51 points.Analysts attributed the drop in Kospi to the narrowing gap between the futures and spot market and a fall in the Standard and Poor's 500 March Futures index.

"The gap between the futures index and underlying spot index narrowed, which led investors to sell futures-linked shares," said Park Hyo-jin, an analyst at Shinhan Securities.

Heavy program sales, led by investment trust companies and brokerage firms, threw cold water on most blue-chip stocks.

Pohang Iron and Steel Co, world's biggest steelmaker in terms of output, fell 13,500 won or 9.28 percent to 132,000 won.

State-run Korea Telecom lost 7,500 won or 5.38 percent to 132,000 won.

Samsung Electronics shed 7,000 won or 2.30 percent to 298,000 won.

Brokers said the market was under constant selling pressure from futures-linked shares believed to have been overbought. Investors scurried to take profits on Kosdaq as declining Nasdaq 100 index futures and Kospi were viewed as a bad omen for the overall market, analysts said.

OTC technology stocks, including Internet-related shares, were sold.

Handysoft, a software developer, was down 58,000 won or 11.93 percent to a daily limit low at 428,000 won.

Daum Communication Corp, an Internet service provider, was down 33,500 won or 11.45 percent to 259,000 won.

Digital Chosun, an Internet-media news provider, was down 20,000 won or 11.83 percent to 149,000 won. In the broader market, trade volume totalled 235.73 million shares, compared to Tuesday's 210.3 million shares.

Trade was valued at 3.38 trillion won compared to 3.39 trillion won on Tuesday.

Decliners outpaced advancing issues 733 to 103, with 49 shares unchanged.

The March futures on the Kospi: closed down 5.25 points at 120.2, while the underlying spot index ended down 5.14 points at 118.68. Analysts said as the two figures closed in on each other, program sales were triggered.

The Korea Stock Exchange said such sales totalled 333.7 billion won.

Investment trust companies bought a net 47.25 billion won worth of shares though institutional investors overall were net sellers of 156.51 billion won worth of shares.

Individual investors bought a net 121.98 billion won worth of shares and foreign investors bought a net 24.89 billion won worth.

Analysts said individual investors may bargain hunt on Thursday, which could offset a further decline of the market.-Reuers