Market blasts off after U.S. mortgage move

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Market blasts off after U.S. mortgage move

Korean shares skyrocketed more than 5 percent yesterday as investors, heartened by the U.S. decision to bail out two mortgage giants, bought mostly large-cap shares, analysts said. And the won jumped against the U.S. dollar.

The benchmark Kospi surged 72.27 points, or 5.15 percent, to 1,476.65. Volume was heavy at 394.9 million shares worth 6.21 trillion won ($5.7 billion), with gainers outpacing losers 728 to 123.

Steep rises across the bourse caused the Korea Exchange regulator to call a sidecar, suspending trading for five minutes after the main index’s future prices rose more than 5 percent.

“The U.S. decision to rescue Fannie Mae and Freddie Mac relieved investors’ jitters over a global financial crisis,” said Bae Sung-young, an analyst at Hyundai Securities. The U.S. Treasury said on Sunday that it will inject as much as $100 billion each in public funds into both mortgage lenders. The decision was intended to help revive a plummeting U.S. housing market and prevent a housing slump from aggravating global financial market jitters.

In the belief that the market hit bottom, investors snapped up heavily discounted shares, Bae said, adding the rebound in investor sentiment will likely see the key index rise to the 1,600-mark. Shipyards gained substantial ground on bargain-hunting. The biggest shipbuilder, Samsung Heavy Industries, soared 9.53 percent to close at 30,450 won while its smaller rival Hyundai Heavy Industries jumped 11.09 percent to 245,500 won. Financial shares also rose blasted off, with leading brokerage Mirae Asset Securities advancing a daily limit of 14.51 percent to 101,000 won. Samsung Securities jumped 13.71 percent to 68,000 won.

Tech-exporters also surged as the ease in concern over a global slowdown raised their demand forecast. Market heavyweight Samsung Electronics gained 4.42 percent to 543,000 won and LG Electronics advanced 7.29 percent to 101,500 won. Chip-maker Hynix jumped 14.7 percent to 19,900 won.

The local currency closed up 36.4 won at 1,081.40 won against the U.S. dollar as the bullish stock market pushed up the demand for the won, dealers said.

Bond prices, which move inversely to yields, also closed higher. Yonhap
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