S. Korean Stocks Dive on Debt Woes

SEOUL — South Korea’s benchmark stock index plunged Thursday, as investors fled stocks amid rising fears of a fresh wave of corporate insolvencies.

The Korea composite stock price index tumbled 25.49 points, or 4.2%, to 579.25, its lowest close since Aug. 13, 1992. Few companies were spared, and many fund managers said the rout isn’t over.

Indeed, few fund managers are betting on a quick revival. A spate of bankruptcies this year has left banks with billions of dollars in bad debts, hammered corporate profits and prompted companies across the country to tighten their belts.

Now, the economy is growing at its slowest pace in four years.

Shares of Samsung Electronics Co., the world’s largest maker of computer memory chips, tumbled 7.1% on Thursday; Pohang Iron & Steel Co., the world’s second-largest steelmaker, skidded 3.2%.

Defaults this week by Ssang Bang Wool Group and Tai Il Media Co. only heightened investors’ concern about the health of corporate Korea. “Stay out of Korean equities,” warned Independent Strategy, a London-based research firm run by former Morgan Stanley strategist David Roche. “Korea has one of Asia’s deepest capital crises.”

This week’s market slide is especially troubling because it came even as the government trumpeted measures that it said would shore up stocks.

As stocks tumbled Thursday, Assistant Finance and Economy Minister Yoon Jeung Hyun said the government might delay stock sales for state-owned companies, such as Korea Telecom.

Investor Spotlight, D7