Market above 1,900 as QE anxiety easesGrowing expectations that the U.S. Federal Reserve will maintain its current policy stance gave Korean stocks a boost yesterday, recovering the 1,900 mark for the first time in four trading days.
The benchmark Kospi gained 0.93 percent to close at 1,900.62.
Foreign investors continued their selling for the eighth consecutive day, dumping a net 157.9 billion won ($1.40 million) of shares ahead of the U.S. Federal Open Market Committee meeting this week. Retail investors sold 48.7 billion won in shares.
Institutional investors pushed up the Kospi index by snapping up 203.9 billion won of Korean shares.
Prices of machinery, electronics, medicine, shipmaking and other transportation equipment-maker shares rose over 1 percent while nonmetal products, telecommunication, and construction firms slipped.
Samsung Electronics gained 1.54 percent to finish at 1,387,000 won. STX Pan Ocean fell by its daily limit of 15 percent to close at 2,185 won, just a day after a court accepted its application for a restructuring plan.
Concern that the Fed would start reducing the amount of financial assets it is buying has been the main factor behind the volatility that has gripped markets over the past few weeks.
Investors were spooked in late May when Fed Chairman Ben S. Bernanke said the U.S. central bank might pull back on its aggressive support for the U.S. economy if indicators, especially hiring, improve.
The Fed buys $85 billion in bonds every month as part of a campaign to keep interest rates low. The aim is to encourage borrowing, spending and investing. Some investors worry that long-term interest rates could spike when the Fed pulls back, raising borrowing costs and threatening the recovery.
Higher yields for government bonds have already started pushing mortgage rates up.
“We think it is too early for the Fed to change its monetary stance at this week’s policy meeting,’’ said Neil MacKinnon, global macro strategist at VTB Capital. “However, the markets will be expecting some clarification of the Fed’s intentions in the light of recent market volatility.’’
Korean won depreciated 4.9 won to close at 1,131.1 won against the greenback.
BY KIM MI-JU, AP [email@example.com]
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