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Seoul stocks plummet nearly 6% amid spread of new coronavirus

A trader wearing a mask monitors data at the foreign exchange dealing room of the Hana Bank headquarters in Seoul on Friday. (Yonhap)
A trader wearing a mask monitors data at the foreign exchange dealing room of the Hana Bank headquarters in Seoul on Friday. (Yonhap)

South Korean stocks have fluctuated between losses and gains amid growing fears about the Wuhan coronavirus outbreak around the world.

Since health authorities confirmed the first coronavirus case here, Seoul’s benchmark Kospi has dipped nearly 6 percent, according to the nation’s sole stock market operator on Sunday.

As of Friday, the Kospi index shed 5.85 percent from Jan. 17, the last trading session before the first case of the virus was confirmed here, the Korea Exchange said.

The index hit 2,262.64 points on Jan. 20 -- a 15-month high since Oct. 5, 2018 -- but it sank to 2,119.01 points Friday, as foreign investors dumped bargains that they previously scooped up.

Over the two-week period, the main bourse’s market capitalization decreased by 88.25 trillion won ($78.85 billion), marking some 1,427 trillion won. The tech-heavy secondary Kosdaq’s market cap also fell by 16.07 trillion won, recording some 232.46 trillion won. Of the total, 104.32 trillion won in the local stock market disappeared.

The coronavirus has also shaken stock markets globally. According to Bloomberg, 86 major countries’ stock market cap reached $86.6 trillion -- shrinking by 2.86 percent, or $2.55 trillion -- as of Thursday (US time), compared with Jan. 20.

Venezuela recorded the highest decrease rate of minus 10.72 percent, followed by Chile and Hong Kong marking minus 8.38 percent and minus 7.53 percent, respectively. Korea came in at fourth-highest, with minus 7.28 percent, the data showed.

Unlike market experts’ earlier prediction that the outbreak would negatively influence the local market in the short term, it may result in a prolonged plummet in the indexes amid worsening secondary and third infections of the novel virus.

Analysts said Korean stocks are expected to further decline this week. Although concerns have been priced in to some extent, investors are expected to sit on the sidelines to gauge the potential fallout from the virus.

“Unless any positive factor appears to ease investors’ anxieties, the market will likely move depending on news flow regarding the new coronavirus next week as well,” said Kim Yong-koo, an analyst at Hana Financial Investment.

“It’s not highly likely to happen, but if the (coronavirus) outbreak continues like the severe acute respiratory syndrome (SARS) outbreak that occurred in 2003 for five months, the global GDP growth rate may drop by 0.3 percentage point. Then the Kospi may dip below the 1,900-point level,” Daishin Securities said.

By Jie Ye-eun (