Asian Stock Markets Plunge On First Trading Day Of 2016 Due To China’s Economic Slowdown, Weakening Oil Prices Amid Middle East Conflict
Asian markets are deeply affected by the economic slowdown of China and the declining oil prices amid growing conflict in the Middle East. As a result, analysts recorded a sharp decline on the stock markets of South Korea, China and Japan on Monday.
Korea Times reported Monday that Korean Composite Stock Price Indexes (KOSPI) decreased 2.2 percent to 1,918.76 points during the first trading day of 2016, which reportedly is an effect of China's economic slowdown.
Analysts forecasted South Korea's stock market to remain weak in the first quarter of the current year as major Korean exporters including Samsung Electronics and Hyundai Motor Group are expected to post unsatisfactory earnings from the previous year.
"If Samsung Electronics disappoints the market with its fourth-quarter and full-year results, the index may fall below the psychologically important 1900 level to the lower end of 1800," KR Futures strategist Seo Sang Young said.
Seo added that China's economic slowdown could be one of the factors for the decrease of KOSPI.
In addition, low oil prices amid Middle East conflict have also affected South Korea's economy.
"Low oil prices and slowing demand from China will continue to have a negative impact on Korean shipments this year," HI Investment & Securities analyst Park Sang Hyun said. "There is no way out for the time being."
"More people sold off their shares" amid China's weakening market, a research at Daishin Securities said.
"Institutional investors tend to sell during the beginning of the year because they have already received their yearly dividend payments, and their off-loading sprees will likely continue for a while, which will weaken the market," Lee Kyung Min opined, as noted by Korea Joongang Daily Tuesday.
Finance Minister Choi Kyung Hwan said the slowdown may continue due to weak global demand and increasing competition from producers in developing countries.
"Economic conditions are not easy due to low oil prices, U.S. interest rate increases and slowing growth in emerging markets," Choi said.
