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Kospi rises on improved investor confidence

July 12,2008
Korean stocks rose almost 2 percent yesterday as investor sentiment was lifted by a report that the U.S. government is mulling taking over the two top mortgage lenders, analysts said. The local currency gained against the U.S. dollar.

The benchmark Kospi rose 30.08 points, or 1.96 percent, to 1,567.51. Volume was moderate at 320.7 million shares worth 5 trillion won ($5 billion), with gainers outpacing losers 627 to 184.

“A report that the U.S. government is considering taking over Fannie Mae and Freddie Mac helped the Kospi extend earlier gains as investors saw it as easing worries over a credit crunch,” said Rhoo Yong-seok, an analyst at Hyundai Securities Co.

Rhoo said the Seoul bourse may rebound next week on the back of corporate earnings reports. The New York Times reported that the U.S. government is considering buying the top U.S. mortgage lenders if their conditions worsen.

But foreign investors unloaded a net 308.6 billion worth of local stocks, continuing a selling spree for the 25th consecutive session, the longest selling streak.

Tech exporters and automakers chalked up significant gains. Market leader Samsung Electronics gained 1.4 percent to 568,000 won and chipmaking giant Hynix Semiconductor surged 4.6 percent to 23,750 won. Top carmaker Hyundai Motor jumped 5.0 percent to 71,200 won on positive second-quarter earnings outlooks.

Shipyards also traded in positive territory. Top shipyard Hyundai Heavy Industries advanced 2.1 percent to 313,500 won.

Airline shares, however, remained sluggish as high oil prices are feared to dent their operating profits. Industry leader Korean Air Lines lost 0.1 percent to 43,200 won and its rival Asiana Airlines retreated 0.1 percent to 4,750 won.

On Thursday, oil prices closed at $141.7 per barrel in New York, up $5.6 from a day earlier. U.S. stocks closed higher Thursday, helped by Dow Chemical’s bid to buy its rival Rohm and Haas. The Dow Jones industrial average gained 0.73 percent and the tech-dominated Nasdaq composite index rose 1.0 percent.

The local currency closed at 1,002.30 won against the dollar, up 0.60 won from Thursday’s close, on the back of the foreign exchange authorities’ strong will to stem currency volatility, dealers said. Yonhap



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