Market gets boost from stimulus abroadKorean stocks closed 0.87 percent higher yesterday due to a rosy outlook for economic stimulus in the euro zone and the United States. The local currency gained against the greenback.
The benchmark Kospi climbed 16.68 points to finish at 1,935.31. The index fluctuated at the 1,920 level during the morning session but recovered to 1,930 levels in the afternoon as institutional investors expanded buying. It has been nine trading days since the benchmark index last hit 1,930 levels. The won gained, snapping a two-day decline before data forecast Korea’s economy expanded at the fastest pace in a year. Government bonds fell.
Gross domestic product increased 0.7 percent in the first quarter from the previous three months, according to a median forecast of 15 economists.
Shares rose amid growth in U.S. home sales, better-than-forecast corporate earnings and speculation the European Central Bank will cut interest rates.
The won climbed 0.3 percent at 1,117.70 per dollar in Seoul, after falling 0.4 percent in the past two days, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 28 basis points to 7.93 percent.
“Rallies in the stock markets together with speculation the ECB may cut interest rates are boosting hopes for more liquidity available to emerging markets,” said Jeon Seung-ji, a currency analyst at Samsung Futures in Seoul. “Investors will still eye the yen, as there are concerns authorities may take steps if the yen breaches 100 per dollar.”
By industry, with the surge of STX group shares, transportation and warehousing added more than 3 percent and construction and retail industry also gained more than 2 percent. Nonmetallic mineral, communication and pharmaceuticals slightly declined.
Among the top shares of the market cap, Samsung Electronics gained 5.06 percent with the possibility to benefit from Galaxy S4. In the IT industry, although SK Hynix and LG Electronics showed earnings that exceeded market forecasts, shares of SK Hynix rose 0.87 percent, while those of LG Electronics slid 0.44 percent.
By Kim Jung-yoon, Bloomberg [email@example.com]