U.S. strength lifts market for second day

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U.S. strength lifts market for second day

Korean shares closed slightly higher yesterday as foreign and institutional investors expanded their investments after a U.S. Federal Reserve report showed the U.S. economy improving.

The Fed in its Beige Book business survey released Wednesday said growth in December was buoyed by holiday spending, an improving labor market and strength in manufacturing.

The benchmark Kospi closed 0.21 percent, or 4.04 points higher, at 1,957.32, rising for a second consecutive day.

Shares of blue chips were mixed.

Samsung Electronics shares jumped 0.15 percent yesterday to close at 1.301 million won ($1,222), while shares of Hyundai Motor rose 0.87 percent to close at 233,000 won. Shares of Hyundai Mobis were up 0.54 percent to 281,500 won, while shares of Posco increased 0.48 percent to 311,500 won.

Posco yesterday announced that Chief Technology Officer and President Kwon Oh-joon will succeed Chairman Chung Joon-yang.

Financial shares, meanwhile, lost ground.

Shares of Shinhan Financial Group dropped 0.57 percent to close at 43,700 won. Shares of KB Financial Group also fell 1.25 percent to 39,500 won, and Hana Financial Group shares slid 0.72 percent to 41,400 won.

Korea’s won touched a one-week low on bets the Federal Reserve will cut its stimulus at a faster pace. A U.S. Labor Department report showed producer prices rose in December for the first time in three months to cap the smallest annual increase in five years.

The won declined 0.1 percent to 1,063.36 per dollar in Seoul. It touched 1,065.55 earlier, the lowest level since Jan. 9.

“The Beige Book confirmed a better U.S. economic outlook and the PPI data supported the sentiment, prompting speculation the Fed may even accelerate the pace of tapering,” said Son Eun-jeung, a currency analyst at Woori Futures. “The stronger dollar will be supported for a while.”

One-month implied volatility in the won, a gauge of expected moves in the exchange rate used to price options, fell eight basis points, or 0.08 percentage point, to 6.23 percent.


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

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