Stocks rise 3 days in a row as investors hope for a rate cut

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Stocks rise 3 days in a row as investors hope for a rate cut

Stocks ended higher on Wednesday, extending their gains to a third straight session on an extra budget plan and a possible rate cut here following a surprise U.S. interest rate reduction. The won rose against the dollar.

The Kospi rose 45.18 points, or 2.24 percent, to 2,059.33.

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Foreigners turned into net buyers for the first time in eight sessions, purchasing 149.5 billion won ($126 million) worth of stocks.

“The broad index ended higher due to the foreign buying and expectations of an extra budget and other policy issues as well as a possible rate cut,” said Huh Jae-hwan, a strategist at Eugene Investment.

The U.S. Federal Reserve slashed interest rates by half a percentage point in an apparent move to mitigate the economic fallout from the coronavirus outbreak.

The Fed’s move raised the possibility that Korea’s central bank could cut its key rate. Last week, the Bank of Korea held the benchmark interest rate steady at 1.25 percent. The bank’s next rate-setting meeting is scheduled for mid-April.

Covid-19, or the new coronavirus, has killed 33 people and infected more than 5,300 others in Korea.

Earlier in the day, Korea proposed an extra budget of $9.8 billion to tackle the economic fallout from the virus and improve its readiness against contagious diseases. The budget is subject to parliamentary approval.

Most large-cap stocks advanced.

Samsung Electronics rose 3.61 percent to 57,400 won, SK hynix was up 1.62 percent to 94,300 won, and Hyundai Motor fell 0.44 percent to 113,000 won. CJ Cheiljedang rose by 3.61 percent to reach 258,500 won and Kakao added 2.57 percent, closing at 179,500 won.

Hanjin KAL, the holding company of Hanjin Group, which has Korean Airlines and low-cost carrier Jin Air under its wing, rose 4.83 percent to a record high of 84,700 won.

Among decliners, Lotte Chemical fell 2.39 percent to 183,500 won after an explosion and fire at its plant in Korea’s southwestern city of Seosan.

The local currency closed at 1,187.80 won against the dollar, down 7.40 won from the previous session’s close.

BY KANG JAE-EUN, YONHAP [kang.jaeeun@joongang.co.kr]
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