Kospi rises after Australian bank cuts rates

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Kospi rises after Australian bank cuts rates

Seoul stocks rose slightly yesterday on hopes that exporting companies would benefit from a weaker won, analysts said.

Recovering from a fall of over 2 percent in morning trading, the benchmark Kospi added 7.35 points, or 0.5 percent, to 1,366.1. Volume was moderate at 343 million shares worth 4.7 trillion won ($3.5 billion), with losers outpacing gainers, 526 to 281.

“Export blue chips, on the back of the won’s sharp loss, provided a long-awaited lift to the Kospi,” said Lim Dong-min, an analyst at Dongbu Securities.

The Korean won closed at 1,328.1 won to the dollar, plunging 59.1 won from Monday’s close and reaching its lowest level since 2002. A weaker won makes local products cheaper abroad.

The key index added further ground after the Reserve Bank of Australia cut its interest rates by 100 basis points during the session, more than double what was expected, raising hopes for a similar move from other financial authorities around the world, according to Lim.

Export-oriented stocks led overall gains. Samsung Electronics, the world’s largest computer memory chip maker, gained 2.7 percent to end at 531,000 won, and its home appliance rival LG Electronics also climbed 3.9 percent.

Hyundai Motor, Korea’s largest automaker, gained 2.4 percent.

“The won has dropped to a level that makes Hyundai’s exports more profitable than its domestic sales,’’ said Song Sang-hoon, an analyst at Kyobo Investment and Securities. “That is brightening the outlook for Korean automakers’ profit in the fourth quarter.’’

Kia Motors, Hyundai’s affiliate and the nation’s second-biggest carmaker, jumped 6.6 percent.

Construction and steel shares were also buoyed. Daewoo Engineering and Construction added 5.7 percent and steel giant Posco gained 0.9 percent.

And Samsung Securities, the biggest Korean brokerage by market value, rose 3 percent. Mirae Asset Securities, the second-biggest, jumped 5.6 percent.

Retailers, however, lost ground on fears that an economic slowdown and consumer inflation could bring down consumer demand. Shinsegae shed 0.6 percent and Hyundai Department Store slumped 5.6 percent. Yonhap, Bloomberg
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