Rally continues as market shakes off oil shock

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Rally continues as market shakes off oil shock

Korean shares on Wednesday closed higher on easing concerns over oil prices following a weekend attack on Saudi oil facilities, taking the rally to nine consecutive trading days.


It is the longest streak in nearly five months since the benchmark Kospi rallied for 13 consecutive trading days between March 29 and April 16.

The stretch would be longer if it wasn’t for the slight dip on Sept. 3, as the Kospi has been on the rise since Aug. 30.

The Kospi on Wednesday gained 8.40 points, or 0.41 percent, to close at 2,070.73. This is the highest since July 25, when the market ended at 2,074.48.

The higher close on Wednesday was driven by net purchases by both foreign and institutional investors. Retail investors were net sellers.

While foreigners were net sellers over the previous three trading days, institutional investors have been shoring up holdings for five consecutive trading days. Retail investors have been off-loading for nine straight trading days.

News that Saudi Aramco has recovered more than 40 percent of affected capacity of the damaged Abqaiq facility helped improve market sentiment despite lingering nervousness about oil security in the future.

Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said the state-run oil company will lift output capacity to 11 million barrels a day by the end of this month and to 12 million by November.

Wednesday’s gains were limited as investors took to the sidelines awaiting the results from the Federal Reserve’s rate-setting meeting.

“Focus is now on the Federal Reserve’s key policy decision later in the day, with investors remaining on alert for progress in U.S.-China trade talks and any developments in the Middle East after the attack on Saudi oil facilities rocked the global markets early this week,” Meritz Securities analyst Ha In-whan said.

The market consensus is that the U.S. Fed will likely lower rates, the second cut since July.

Tech and auto stocks led gains, with Samsung Electronics rising 1.7 percent to 47,700 won, SK Hynix gaining 1 percent to 80,200 won and top carmaker Hyundai Motor advancing 1.2 percent to 127,500 won.

Refinery and chemical stocks continued to trade in negative territory on easing woes over oil prices.

No. 1 refiner SK Innovation declined 1.2 percent, to 169,500 won, while shares of leading chemical firm LG Chem declined 0.6 percent to 325,500 won.

The local currency closed at 1,191.30 won against the U.S. dollar, down 0.6 won from the previous session.

BY LEE HO-JEONG, YONHAP [lee.hojeong@joongang.co.kr]
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