Market stages comeback as slight hints of optimism stir
Published: 29 Jan. 2009, 00:10
An employee at Korea Exchange headquarters in Yeouido yesterday smiles after the benchmark Kospi gained 64.58 points to close at 1,157.98. The market was closed on Monday and Tuesday for the Lunar New Year holidays. [YONHAP]
The local stock market surged on the first trading day after the Lunar New Year holidays yesterday, reflecting news that eased concern during a two-day respite from trading.
The upturn, however, could be short-lived, some observers fear.
The benchmark Kospi gained 64.58 points, or 5.9 percent, to 1,157.98.
Backed by local shares snapped up by foreigners using dollars, the won against the greenback also improved, finishing at 1,376.10 won per dollar, appreciating by 14.80 won.
Foreigners bought 148.2 billion won ($107.6 million) more than they sold, ending a four-day selling streak. Institutional investors bought 489.3 billion won net while retail investors sold 701.2 billion won.
The Kospi index advanced so sharply a sidecar mechanism was activated for the second time this year. The sidecar halts trading for five minutes after the Kospi 200 futures rise or drop 5 percent compared to the previous day’s closing for one minute.
“The surge today is in reaction to what lifted U.S. and European markets over the past several days,” said Choi Jae-sic, an analyst at Daishin Securities. The U.S. Dow Jones industrial average rose 0.7 percent.
Choi said concern over worse-than-expected fourth-quarter business data of companies at home and abroad dissipated during the holidays, adding the market already discounted much of the fear of global economic recession.
The confirmation of Tim Geithner, known as an economic crisis specialist, as U.S. Treasury secretary on Monday also worked in favor of the local market, Choi said.
The Daishin analyst also listed expectations of investors in Korea’s new economic team, named last week, as another market booster.
The economic team includes the finance minister and the Financial Services Commission chairman.
That team was given something of a late holiday present yesterday.
The Bank of Korea reported that consumer confidence rebounded from a 10-year low this month on expectation that economic stimulus packages will prop up the slumping economy. The consumer survey index rose to 84 from 81 in December.
Lee Jong-woo, the head of the research center at HMC Investment and Securities, said, however, the stimulus policies have yet to have much effect on the market.
“There are many stimulus measures coming out, but the grim economic data, from inside and outside [Korea], are offsetting them,” said Lee. He said the market would continue to vacillate “for the time being.”
By Moon Gwang-lip Staff Reporter [[email protected]]
with the Korea JoongAng Daily
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