Stocks rally ahead of interest rate decision

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Stocks rally ahead of interest rate decision

Korean stocks rallied for three consecutive trading days, gaining 20.89 points yesterday buttressed by foreign investors who bought up 400.1 billion won ($388.9 million) worth of shares.

The benchmark Kospi finished at 2,062.36 points, a 1.02 percent increase from the previous day. While foreign investors led the index up, retail investors dumped 270.2 billion won worth of stocks, and institutional investors sold 133.5 billion won.

Samsung Electronics, the market leader by capitalization, dropped 0.16 percent to 1.26 million won. LG Electronics lost 0.13 percent to 78,000 won. SK Hynix, Korea’s leading memory chip maker, gained 1.5 percent to 43,900 won. Another major IT corporation LG Display gained 1.2 percent to 33,650 won.

Automobile shares were largely on the rise. Hyundai Motor added 0.65 percent to 233,500 won, while the company’s auto parts maker Hyundai Mobis increased 1.02 percent to 296,500 won. Kia Motors also gained 1.98 percent to 61,800 won.

Although overall industry shares were mixed, most of the large-cap shares ended higher with Posco, the nation’s largest steel corporation, climbing 1.23 percent to 329,500 won and Hyundai Steel also adding 1.04 percent to 77,700 won.

Korea’s major chemical company LG Chem inched up 0.37 percent to 272,000 won. Its rival Lotte Chemical, on the other hand, declined 1.99 percent to 172,500 won.

Major search engine shares were selling like hot cakes. Naver rallied 3.76 percent to 800,000 won and Daum soared 3.76 percent to 171,300 won.

The won weakened to 1,028.90 per dollar, according to Korea Exchange Bank. One-month implied volatility, a gauge of expected swings in the exchange rate used to price options, dropped 19 basis points, or 0.19 of a percentage point, to 6.54 percent.

Yesterday’s drop was the first in four days and reflected the attitudes of investors waiting for central bank Governor Lee Ju-yeol’s decision today on the key interest rate.

“One cut by the BOK is already reflected in the exchange rate,” Lee Hyun-kyung, a Seoul-based currency trader for Busan Bank, said yesterday. “The won could weaken further if the governor signals additional easing tomorrow.”

BY kim eun-ji, bloomberg [eunjik@joongang.co.kr]




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