U.S. plan for bad debt bolsters Kospi, won

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U.S. plan for bad debt bolsters Kospi, won

Seoul’s main stock market ended up 1.9 percent yesterday to its highest close in more than two months, as investors bought financials and builders following overnight rallies on U.S. markets. The local currency rose against the U.S. dollar.

The benchmark Kospi rose 22.2 points to 1,221.7. Volume was heavy at 505.3 million shares worth 5.8 trillion won ($4.2 billion), with gainers outpacing losers 521 to 287.

“Investors seemed to have been comforted by the U.S. government’s plan to purchase bad assets from struggling banks, prompting purchases in financial issues here,” said Lee Seung-woo, an analyst at Daewoo Securities.

On Monday, the U.S. government announced detailed plans to spend as much as $1 trillion to purchase toxic assets from banks. The Dow Jones industrial average jumped 6.8 percent amid sharp gains in banking issues, and the tech-heavy Nasdaq also rose 6.8 percent.

Overseas investors drove the market higher here, buying more shares than they sold for a sixth consecutive day.

Major lenders gained marked ground. KB Financial Group, which controls the nation’s biggest lender, jumped 4.6 percent, while Woori Financial Group, which controls the second-biggest, rose 2.4 percent.

Steel and machinery shares added to the upward momentum. Top steelmaker Posco advanced 3.3 percent, and No. 1 power equipment manufacturer Doosan Heavy Industries and Construction jumped 6.4 percent.

Telecom shares, however, closed weaker, with fixed-line telephony giant KT inching down 0.1 percent.

Korea’s won, Asia’s best performer this month, strengthened for a second day against the dollar. The won gained 0.6 percent to 1,383.5 per dollar as of the 3 p.m. local close, according to Seoul Money Brokerage Services Ltd. It touched 1,373.5 on March 19, the strongest level since Feb. 9.

“The Korean won has been among the most vulnerable when people are in a bad mood, so it’s only fair that it could participate on a day when the markets rally,” said David Cohen, director of Asian forecasting at Action Economics in Singapore.

“We’ll see most of the regional currencies strengthening on the improved investor sentiment.” Yonhap, Bloomberg
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