Market loses 0.41 percent to end the weekKorean shares closed 0.41 percent lower yesterday, after a brief rebound following U.S. Federal Reserve Chairman Ben S. Bernanke’s remarks that eased concerns over an early withdrawal of quantitative easing measures. Institutional investors were net sellers, while foreign and retail investors were net purchasers of local stocks.
The benchmark Kospi dropped 7.62 points to close at 1,869.98 yesterday in Seoul. In particular, shares of local automobile companies plunged after Shi Jianhua, deputy secretary general of the government-backed China Association of Automobile Manufacturers, was quoted Thursday as saying that more cities in China may restrict vehicle purchases to fight air pollution.
Shares of Hyundai Motor fell 5.86 percent to close at 209,000 won ($185.70), while shares of Kia Motors dropped 4.72 percent. Shares of Hyundai Mobis, an auto-component maker, also fell 1.54 percent.
Shares of financial institutions increased.Shinhan Financial Group jumped 0.25 percent to 39,850 won while shares of KB Financial Group went up 0.42 percent to 35,450 won.
Meanwhile, the won posted its biggest weekly gain in almost five months and government bonds rose after the central bank raised its growth forecast amid optimism that U.S. policy makers will maintain monetary stimulus.
The Bank of Korea kept its benchmark interest rate unchanged at 2.5 percent on Thursday and boosted its 2013 expansion projection to 2.8 percent from an April estimate of 2.6 percent. Federal Reserve Chairman Bernanke said on July 10 the United States will need stimulus “for the foreseeable future,” and minutes of the Federal Open Market Committee’s June meeting showed policy makers want to see more signs that employment is picking up before slowing bong purchases that have spurred demand for emerging-market assets.
“Bernanke’s signal that the tapering may take place later than what the market expected was the main driver of the won’s rally this week,” said Hong Seok-chan, an analyst at Daishin Economic Research Institute in Seoul. “The BOK gave a more optimistic view of South Korea’s economic recovery, which will support the currency further.”
BY LEE EUN-JOO, BLOOMBERG [firstname.lastname@example.org]
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