Investors grab up undervalued local shares
Korean stocks rebounded yesterday from an 18-month low as investors snapped up recently beaten-down brokerage and construction shares despite spreading concerns over financial instability, analysts said. The local currency fell to a nearly four-year low against the U.S. dollar.The benchmark Kospi jumped 19.75 points, or 1.4 percent, to 1,426.89.
“Investors seemed to view the recent market plunge as quite excessive, with institutions and foreigners buying mostly undervalued large-cap shares,” said Park So-yeon, an analyst at Korea Investment and Securities. “Brokerage and construction shares surged, driving the overall market gains.”
Top brokerage Samsung Securities surged 9.09 percent, while its rival Mirae Asset Securities jumped 13.62 percent.
Construction shares added to the upward move as the government’s push to ease property-related regulations bolstered investor sentiment.
Top builder Daewoo Engineering and Construction surged 11.01 percent and smaller Kumho Industry rose by its daily limit of 14.98 percent. Recent oil price drops provided a lift to transportation shares. Top shipper Hanjin Shipping jumped 14.88 percent while smaller Korea Line advanced 10.25 percent.
Steel and energy shares, however, closed in negative territory. The nation’s No. 1 steelmaker Posco lost 2.48 percent, while oil refineries SK Energy fell 2.17 percent on concerns that the plunging won could dent their profitability. On Monday, the price of Dubai crude, Korea’s benchmark, fell to $101.65 per barrel, the lowest in nearly five months. After peaking at $140.22 in mid-July, it has dropped nearly 30 percent.
Despite the state’s warnings against one-sided upward movement of the won-dollar exchange rate, the local currency continued to plunge. The won closed down 14.5 won at 1,148.5 won, the lowest level since Oct. 7, 2004. Earlier in the day, Shin Je-yoon, vice finance minister for foreign affairs, told reporters that the recent currency volatility is “excessive” and the financial markets will likely stabilize after next week. Concerns over a possible capital outflow from the local bond markets this month are feeding the fears that the economy could face the biggest economic crisis since the 1997-98 financial meltdown. Yonhap
with the Korea JoongAng Daily
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