Local currency strengthens 0.79% to 1,070 against dollar


Seoul shares took a dramatic upturn Tuesday, rising 4.83 percent to close at 1,879.87 as foreign investors buoyed by overnight gains in the U.S. turned into net buyers for the first time in 10 days.

It is the biggest daily jump the benchmark KOSPI has made in more than two years, the Korea Exchange said.

The junior KOSDAQ also advanced 4.66 percent and finished at 496.23.

“The KOSPI is performing a rebalancing act. The index may rise to 1,920 as it rebounds from the loss in the past two weeks, but it will take a while for investor sentiment to fully recover,” Yoon Ji-ho, a strategist at Hanwha Securities said. He also attributed the rise to improved job market data and consumer reports in the U.S.

The local currency strengthened 0.79 percent to 1,070 against the greenback, after touching a one-week peak of 1,067.8 mid-day.

Samsung Electronics, the world’s biggest technology company by revenue, jumped 6.08 percent to 750,000 a share and LG Electronics advanced 0.31 percent to 65,000.

Hyundai Motor Co., the biggest carmaker here, gained 7.98 percent and finished at 203,000 won.

Yoon recommended a selective picking of stocks that plunged heavily in the past two weeks. He specified his recommendation to blue chip exporters in construction, chemical and shipbuilding industries that dived sharply on the dimmed economic outlook of major economies.

“The Seoul market is better absorbing the external shocks than it did back in 2008-9. The crash in the past week did alarm investors over risks but it is unlikely to lead to a further downturn,” Oh Hyun-seok, a Samsung Securities analyst said.

Seoul stocks had the most volatile session in the past week since the 2008 financial crisis on market crash in the U.S. and Europe sparked by the historic downgrade of U.S. sovereign debt by Standard & Poor’s on Aug. 6.

The financial regulator imposed a ban on short selling of stocks for the next three months as the KOSPI plunged almost 17 percent in the first two weeks of August. The Financial Services Commission said it is weighing other options to tame volatilities caused by in and out “hot” foreign capital. One idea, according to an FSC official, is giving tax benefits for long-term investment funds.

By Cynthia J. Kim (cynthiak@heraldcorp.com)