Stock market edges up after Fed decision

Korean shares rose slightly yesterday led by institutional and foreign investors. The stock market rose for a third consecutive day despite overnight news from the United States that the Federal Reserve will cut stimulus that has fueled demand for emerging-market assets. Sovereign bonds declined.

The benchmark Kospi rose 0.05 percent, or 1.02 points, to close at 1,975.65 yesterday in Seoul. Although retail investors net sold their investments worth more than 170 billion won ($160 million), foreign and institutional investors expanded their investments by net purchasing more than 180 billion won of local shares.

Blue chip shares were mixed.

Shares of Samsung Electronics rose 1.86 percent to close at 1.427 million won, while shares of Posco rose 0.15 percent to 328,500 won. Shares of Naver jumped 2.82 percent.

However, shares of Hyundai Motor, the country’s largest automaker, dropped 3.08 percent to close at 220,500 won, while shares of Hyundai Mobis plunged 3.94 percent to 280,500 won.

The Korean won, meanwhile, fell by the most since July on concern that capital outflows will accelerate after the Federal Reserve’s pullback from its stimulus.

The won’s recent moves versus the yen have been “relatively fast” and are “problematic,” Vice Finance Minister Choo Kyung-ho said yesterday.

The won has strengthened 5.6 percent against the yen during the past three months.

“Most Asian currencies are weakening against the dollar as concerns about capital outflows have escalated,” said Jude Noh, the chief foreign exchange trader at Suhyup Bank in Seoul. “The official’s comment on the won-yen rate also weighed on the Korean currency.”

The won slid 0.9 percent, the most since July 8, to close at 1,060.22 per dollar in Seoul. The decline was the biggest among 11 Asian currencies tracked. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 15 basis points, or 0.15 percentage point, to 6.49 percent.

The yield on the 3.375 percent sovereign notes due September 2023 climbed two basis points to 3.63 percent, according to Korea Exchange prices.

BY LEE EUN-JOO, BLOOMBERG [angie@joongang.co.kr]