Daewoo Watch Fuels Stock Rally

Expectations over an imminent takeover by General Motors Inc. of ailing Daewoo Motor Co. sparked a rally on Seoul's main stock exchange Tuesday, with the benchmark index hitting an eight-month high.

The Korea Composite Stock Price Index, or Kospi, gained 13.58 points, or 2.2 percent, to 632.05, off the day's low of 615.87. It was the Kospi's highest close since Sept. 14, 2000, when it closed at 650.14.

The Kosdaq market also moved higher on strong retail buying. Its composite index added 0.59 point, or 0.7 percent, to 83.81.

On the main Korea Stock Exchange, trading was very heavy at 530 million shares valued at 2.5 trillion won ($1.9 billion).

Gainers led decliners 439 to 360, with 61 other stocks unchanged. Twenty-seven shares jumped by the daily limit of 15 percent, while four stocks were down by that limit.

The Kospi dipped in early trading but turned buoyant as news spread that General Motors will begin takeover talks with the Korea Development Bank, which is in charge of the sale of Daewoo Motor.

Shares of Daewoo Motor Sales, the Korean carmaker's domestic sales arm, soared by the daily limit on the news, before sliding into negative territory during the last minutes of trading. The shares closed down 9.5 percent at 4,110 won.

Analysts said investors dumped the shares on concern the U.S. automaker would take over assets of Daewoo Motor Sales, not the company itself.

Key large-capitalized stocks rallied to boost the index. Samsung Electronics Co. rose 4.3 percent to 232,000 won, and Pohang Iron & Steel Co. gained 1.4 percent to 108,000 won. Hyundai Motor Co. put on 3.4 percent to 24,300 won.

Hynix Semiconductor Inc. climbed 6 percent to 4,570 won, after the government said it would revise laws to complete the ailing chipmaker's spinoff from the Hyundai Group. It was the most heavily-traded stock on volume of 134.6 million shares, a record for the daily turnover of a single stock.

by Kim Hyun-chul