SKorean growth slows, stocks plunge as global crisis bites
Written by Writer on Saturday, October 25th, 2008
SKorean growth slows, stocks plunge as global crisis bites
SEOUL: South Korea’s export-driven growth hit a four-year low in the third quarter and the stock market plummeted Friday, prompting calls for rate cuts to help it weather the global economic slowdown.
Samsung Electronics, the world’s largest memory-chip maker and flagship of the country’s biggest group, added to the gloom—reporting a 44-percent fall in third-quarter net profit and warning of tough times ahead.
Authorities in recent days have unveiled sweeping measures to stabilize jittery markets. Credit-rating agencies and analysts say Asia’s fourth-largest economy does not face a rerun of the 1997-1998 meltdown.
But stock investors still seemed haunted by decade-old ghosts.
“People are in a panic,” Samsung Securities’ Kim Seong Bong told Dow Jones Newswires.
While the economy was stronger than in 1997-1998, “the experience of receiving an IMF bailout package during that time seems to be haunting investors, leading them to acquire cash but to ignore long-term valuation of corporates.”
The KOSPI index, in line with other Asian bourses, finished sharply lower, losing 10.6 percent at 938.75 amid massive foreign selling.
Before the market opened the central bank reported GDP growth rose 0.6 percent quarter-on-quarter in July-September, the lowest figure since it recorded 0.5 percent growth in the third quarter of 2004.
Year-on-year growth was 3.9 percent, the weakest since the second quarter of 2005.
“The pace of the economic slowdown is quickening,” central bank official Choi Chun Sin told reporters. “Global financial turmoil and the economic slump hurt domestic demand and it seems that export growth is losing steam faster than expected.”
Goods exports fell 1.8 percent quarter on quarter in July-September after rising 4.3 percent in the second quarter.
Samsung Electronics reported net profit of 1.22 trillion won ($873.3 million) compared to 2.19 trillion won a year earlier.
Sales rose 15.4 percent year on year to 19.2 trillion won but operating profit tumbled 51 percent to 1.02 trillion won.
“The market environment in the third quarter proved challenging amid rising costs and a downturn in the global economy,” said Chu Woo Sik, Samsung’s senior executive in charge of investor relations. “We foresee the coming months to be an even more challenging period.”–AFP
The Manila Times
Saturday, October 25, 2008
