중앙데일리

Bargain hunting frenzy lifts stocks

Investors pin hopes on U.S. Fed action, a conclusion to the civil war in Libya
Korean builders could profit from rebuilding war-torn country

Aug 24,2011
Korean stocks saw the biggest gain among Asian indexes yesterday on news that the war in Libya is nearing an end as well as speculation on impending steps by the Federal Reserve to shore up the U.S. economy.

Analysts forecasted that resumed crude oil production and reconstruction in Libya could hurt Korean oil refiners in the short term, while buoying local builders in the long-term. Overseas, sovereign debt-ridden Italy was seen as a possible beneficiary of the progress in Libya, while analysts are watching whether Libya’s renewed oil production will drive down the price of crude and pave the way for policy changes in the U.S. to ease recession fears.

Local investors breathed easier yesterday as the benchmark Kospi saw a substantial rebound for the first time since Aug. 17 by climbing 3.86 percent to close at 1,776.68.

The news from Libya and the U.S. thawed investor sentiment enough to spark a bargain hunting frenzy by investment companies. “Although developments in Libya did not serve as a strong push for the Kospi’s rebound, it did provide an opportunity that improved investor sentiment toward stocks sensitive to economic downturns,” said Kim Jung-hoon, a strategist at Korea Investment Securities.

European shares rose from two-year lows, led by France’s CAC40 rise of 1.9 percent.

Futures on the Standard & Poor’s 500 signaled a rebound on hopes that central bankers’ will take action at a meeting this week in Wyoming. When Chairman Ben S. Bernanke hinted at a second round of asset purchases last year, it spurred a 28 percent rally in the S&P 500 that ended on April 29.

With good news few and far between these days, analysts seized on the prospect of an end to the Libyan war.

Libya is expected to soon begin producing crude oil. A spokesman for the oil company under rebel control, Arabian Gulf Oil Co., said on Sunday that the firm could produce up to 180,000 barrels of oil a day within two to three weeks if the security of its facilities is ensured.

Analysts are watching whether this will drive down the price of oil, reduce inflationary pressure and pave the way for a third quantitative easing (QE3) by the U.S. Federal Reserve.

The rebuilding of Libya could also be good news for Korean builders.

“In the last three years, Hyundai Engineering & Construction has signed building deals worth $15.4 billion, while Daewoo Engineering & Construction signed some $1.1 billion in deals,” said Byeon Seong-jin, an analyst at Mirae Asset Securities. “They have yet to receive $2.5 billion and $1 billion, respectively, so they will benefit from [the war’s end].”

According to the KRX yesterday, from Aug. 2 to Aug. 22, it had made some 24 requests to publicly clarify rumors that affected the stock prices of Kospi and Kosdaq-listed companies.

Out of the rumors, eight were denied by the companies as being false, 11 could not be confirmed as “developments were still pending,” while the remaining five have not yet been clarified - leaving at least 19 instances unfounded on fact.

The ascendancy of rumors in a deeply uncertain market is not limited to Korea. On Aug. 10, the rumor that French banking leader Societe Generale was in financial trouble - with its roots in a British tabloid article - crushed European stocks and dented global markets.

“Making investment decisions based on rumors that could have been leaked by some to manipulate stock prices can be disastrous,” said a KRX official.


By Lee Jung-yoon [joyce@joongang.co.kr]



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