December 01, 2016 10:48
The prolonged power vacuum caused by the massive corruption scandal that has engulfed President Park Geun-hye has left the Korea Composite Stock Price Index reeling.
Shares of companies linked to the scandal have tanked, but the victory of U.S. president-elect Donald Trump, who ran on a ticket of greater trade protectionism, also seems to have played a role.
The domestic stock market began heading downhill on Oct. 25, after Park made a first partial apology to the public.
On Wednesday the KOSPI closed at 1,983.48 points, down around three percent from Oct. 25. Since then, the KOSPI has hovered at around 1,970 to 1,980 points for a month. The junior Kosdaq index followed the pattern, dropping eight percent over the same period.
Around W39 trillion worth of funds have drained from the KOSPI and Kosdaq markets since (US$1=W1,170). Investors are standing by the sidelines.
According to the Korea Exchange on Wednesday, average daily turnover in November fell to W4.4 trillion or 303.7 million shares, the lowest this year. On Nov. 21, turnover stood at a mere 201.9 million shares, the lowest since June 2014.
One stock market source said, "Investors are taking a wait-and-see approach as the scandal unfolds and Trump's policies take shape."
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