South Korean stocks closed higher Wednesday to set another yearly record as investor sentiment was boosted by the government’s latest economic stimulus package, analysts said. The South Korean won slightly rose against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) gained 20.64 points, or 1 percent, to 2,082.61. Trading volume was moderate at 328 million shares worth 6.13 trillion won ($5.99 billion), with gainers outpacing losers 417 to 384.
After breaching the 2,060-point level in the previous session for the first time in three years to close at 2,061.97, the KOSPI passed the 2,090-point level at one point during Wednesday’s trading.
“The recent rally is attributed to the rising hope over the government’s policy,” said Baek Yoon-min, an analyst at KB Investment & Securities Co., adding that foreign investors have been pushing up the index in recent sessions.
The government announced last week that it will implement a macroeconomic policy package worth about 40.7 trillion won to kick-start an economic recovery beset by anemic domestic demand, slowing exports growth and deepening uncertainties at home and abroad.
The plan comes as the South Korean economy faces a protracted low growth trend. The government revised downward its growth outlook for this year to 3.7 percent from 3.9 percent.
Foreigners bought a net 598.2 billion won, while retail investors offloaded a net 578.5 billion won. Institutions sold a net 9.8 billion won.
Market watchers say the summer market rally won’t die out any time soon, arguing the stimulus measures and signs of global economic recovery will further lift the local bourse. Retail, construction, and securities shares are expected to benefit from the expansionary fiscal policies.
“The KOSPI is rising at a faster-than-expected pace with a large influx of foreign money,” Im No-jung, an analyst at I’M Investment & Securities Co., said. “If the index breaks the 2,100-level, it will attract more domestic funds to bring on a bullish market.”
Finance Minister Choi Kyung-hwan on Wednesday said the government will inject about 26 trillion won in the form of fiscal measures and policy financing in the second half of this year to speed up the economic recovery.
South Korea’s cheery industrial performance released earlier in the day also raised expectations of a faster economic recovery.
According to Statistics Korea, production in the mining, manufacturing, gas and electricity industries expanded 2.9 percent last month from May, marking the fastest on-month output growth since September 2009.
Some experts are betting on a key rate cut, saying the monetary policy should keep pace with the expansionary fiscal measures to achieve synergy.
Kwak Byung-ryeol, a strategist at Hyundai Securities Co., expected the central bank to cut the key interest rate after the injection of government money, as in 2003, 2009 and last year.
“Follow-up economic measures and expectations of a rate cut will brighten the economic outlook, which will further boost the stock market in the third quarter of this year,” Kwak said.
SK Telecom, the country’s No. 1 mobile carrier, advanced 5.92 percent to close at 259,000 won on the back of foreign buying.
KT rose 6.55 percent to 33,350 won and LG Uplus increased 5.2 percent to 9,500 won.
Tech shares led the market’s gain, with Samsung Electronics rising 0.65 percent to 1,395,000 won and top chipmaker SK hynix adding 5.29 percent to 46,750 won.
LG Electronics gained 1.21 percent to 75,400 won.
Carmakers also traded higher, with No. 1 Hyundai Motor rising 2.95 percent to 244,500 won and its smaller affiliate, Kia Motors, advancing 0.83 percent to 61,000 won.
Auto parts maker Hyundai Mobis climbed 2.03 percent to 301,500 won.
Logistics stocks closed lower, with Hyundai Glovis falling 0.19 percent to 261,500 won and Korean Air losing 1.39 percent to 35,450 won.
Hanjin Shipping shed 2.79 percent to 5,570 won.
The local currency ended at 1,024.30 won against the greenback, up 0.10 won from Tuesday’s close. (Yonhap)