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News of S. Korean President's Impeachment Causes Stock Price Dip - 2004-03-12

Investors in South Korea pulled out of the stock market, following the impeachment of the country's president. Terrorist attacks in the Spanish capital of Madrid sent shock waves through global markets at the week's end and Asia was no exception.

South Korea's main share index lost more than 6 percent this week as investors sold massive amounts of stocks. Investor confidence was rattled by the political unrest, which culminated in the impeachment of President Roh Moo-hyun.

But late bargain hunting helped the Kospi finish the week a few points above its low of 822. The market closed at 848.

South Korea Finance Minister Lee Hun-jae vowed to maintain economic stability and South Korea's credit rating.

Many analysts do not see the political crisis as having a lasting effect on equities.

Ajay Kapur is a regional investment strategist with Citigroup in Hong Kong.

"The [South] Korean market has done exceedingly well this year until this week," said Ajay Kapur. "I think the valuations still look pretty good to me, so I expect this is only a temporary shock."

Elsewhere in Asia, markets took a beating following terror attacks on Madrid's commuter train system, which killed about 200 people.

While initially pointing to ETA - a separatist group from Spain's Basque region - claims that the international Islamic terror network, al Qaida, might be involved sent jitters through global markets.

Al Qaida is believed responsible for the September 11 terror attacks on New York and Washington that killed thousands. Mr. Kapur says that if further evidence points to al Qaida, global markets may take longer to recover.

"I think that if it is al Qaida, that is going to be perceived more negatively than if it is ETA," he said.

By the week's end, Tokyo's Nikkei index lost 3.2 percent to end at 11,162.

Taipei's Taiex index was down 2 percent to close at 6,800.

And Hong Kong's Hang Seng finished at 12,932, 4 percent lower than last week's ending.