Kospi jumps 1.49% after EU intervention

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Kospi jumps 1.49% after EU intervention

Korean stocks climbed 1.49 percent yesterday on hopes that fiscal conditions would stabilize in Cyprus once emergency loans are pumped in as agreed by European lenders.

The benchmark Kospi went up 28.96 points to close at 1,977.67 yesterday. While retail and foreign investors sold off their Korean shares, institutional investors bought large amount of shares that led the Kospi to rebound in four market-trading days.

“The news on Cyprus helped ease investor concerns about a European debt crisis, prompting currencies like the won to rise,” said Son Eun-jeong, an analyst at Woori Futures in Seoul. “Exporters are also seen to sell dollars from their overseas income, while government comments on the currency may limit further gains in the won.”

After days of stalled negotiations, the euro zone countries and the International Monetary Fund yesterday reached an agreement to help Cyprus with a bailout worth 10 billion euros to prevent the European country from going bankrupt.

Shares of Samsung Electronics rose 2.75 percent to 1.49 million won while shares of LG Electronics climbed 2.22 percent to 82,700 won compared to the previous market close. SK Hynix also went up 2.65 percent to 29,050 won.

Shares of automakers and banks also gained ground.

Stocks of Hyundai Motor, the country’s largest automaker, jumped 0.47 percent to 215,500 won while shares of Kia Motors also rose 0.91 percent to 55,600 won. Shares of Shinhan Financial Group climbed up 4.65 percent to 39,400 won while KB Financial Group jumped 1.52 percent to 36,800 won.

In contrast, shares of NHN, the operator of the country’s largest portal Naver, dropped 1.64 percent to 270,500 won.

Meanwhile, the won rose 0.8 percent to 1,110.85 per dollar in Seoul, the biggest gain since Feb. 4, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 14 basis points, or 0.14 percentage point, to 8.17 percent.

By Lee Eun-joo, Bloomberg [angie@joongang.co.kr]
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