Korean stocks advance Monday, led by construction and tech companies

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,236.16 points on Monday, up 23.04 points, or 1.04 percent, from the previous trading day. [YONHAP]

Stocks advanced Monday to end their three-day losing streak, with construction and tech companies leading the rally, as the Korean government's 50-trillion-won ($35 billion) liquidity support plan eased worries about growing credit crunch risks.

The local currency ended nearly flat against the dollar.

The Kospi rose 23.04 points, or 1.04 percent, to close at 2,236.16. Trading volume was moderate at 434 million shares worth 6.76 trillion won, with gainers outnumbering decliners 622 to 246.

On Sunday, the financial authorities said they would expand liquidity supply programs to at least 50 trillion won to calm the corporate bond market unnerved by the default on the debt payment by the developer of an amusement park in Gangwon.

The failure to repay 205 billion won in debt has jolted the market as many institutional investors bought the asset-backed commercial papers issued by the developer, Gangwon Jungdo Development, which is 44 percent owned by the province.

Analysts said recent comments by Fed officials on the need to slow the pace of interest rate increases also boosted investor sentiment.

The market widely predicts another 0.75 percentage-point rate hike by the Fed in December.

The plan to expand liquidity support sent construction companies rallying in Seoul, with Hyundai Engineering & Construction jumping 2.3 percent to 34,950 won and GS Engineering & Construction soaring 3.5 percent to 22,450 won.

Samsung Electronics closed up 2.86 percent at 57,500 won.

Posco Chemical spiked 4 percent to 194,500 won after reporting its largest quarterly operating profit ever for the third quarter.

In contrast, Hyundai Motor tumbled 3.3 percent after reporting a decline in its third quarter net profit, due to massive provisions for after-sales services involving the Theta II engine.

The local currency ended at 1,439.70 won against the dollar, down 0.1 won from Friday's close.

The Kosdaq gained 14.02 points, or 2.08 percent, to close at 688.50 points.

Bond prices, which move inversely to yields, closed higher. The yield on three-year government bonds fell 19.6 basis points to 4.299 percent, and the yield on 10-year government bonds declined 17.0 basis points to 4.485 percent.

BY LIM JEONG-WON, YONHAP [lim.jeongwon@joongang.co.kr]