Wednesday, November 24, 2010

Seoul markets seen falling after N.Korea attack

SEOUL: South Korean markets looked set to tumble on Wednesday, Nov 24'' as North Korea's deadly attacks on an island near the border spooked investors, but analysts said the impact would be shortlived unless the conflicts escalated quickly.

South Korean shares trading in U.S. markets and the won fell between 3 percent and 4 percent overnight as the worst attack on civilians since the 1950-53 Korean War persuaded global investors to stay clear until stability returned.

Analysts said the stock market and the won could fall more than 3 percent when the local markets open at 9 am (0000 GMT) for the first time since the North Korean artillery shelling was reported after market hours on Tuesday.

"We see the primary support level at the KOSPI's 60-day moving average of around 1,870 points and the secondary support level at the October low of around lower-middle 1,800 points. I think it is highly unlikely to break below 1,800 points, unless we see further acts of aggression by North Korea," said Chung Seung-jae, market analyst at Mirae Asset Securities.

The KOSPI last ended at 1,928.94 points on Tuesday, representing a 15 percent gain this year to date on top of a 50 percent jump in all of 2009.

South Korea warned North Korea of "enormous retaliation" if it took more aggressive steps after Pyongyang fired scores of artillery shells at an island, killing two South Korean soldiers and wounding 17 others and three civilians.

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The BNY Mellon index of leading Korean ADRs fell 4.22 percent in U.S. trade on Tuesday, underperforming the wider overseas shares index that fell 2.9 percent.

At the start of an emergency meeting of finance officials, Vice Finance Minister Yim Jong-yong said Asia's fourth-largest economy was strong enough to absorb the shocks and vowed to take steps if necessary to stabilise markets. [ID:nSEV000236]

Analysts said South Korean markets would be regaining ground gradually unless the conflict escalated into broader fighting. Past conflicts with the reclusive state, they said, had failed to leave a lasting effect on South Korean markets. - Reuters


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