KOSPI · May 4, 1998
The price of restructuring
-6.98%
single-day change vs previous close
Part of a longer stretch
Korea's IMF crisis
near the end of it · 1997-06-17 → 1998-06-16, -64.66% over the whole period
What happened that day?
- On 4 May 1998 the KOSPI fell 6.98% in a single day
- Interest rates had been raised sharply as a condition of the IMF programme, to defend the won and hold down prices
- The problem was that companies could not survive those rates. Heavily indebted firms failed one after another
- Each failure put losses on a bank, and weaker banks could not lend even to healthy companies
- Unemployment jumped, spending froze, and the economy got worse in a loop
- The low came six weeks later on 16 June. Rates then began coming down and the recovery started
Sources
Every figure on this page is recomputed from the original daily closing prices and checked against them at build time. The account of what happened is written from the sources listed above.