South Korean stocks rallied for a sixth straight session to reach nearly a five-month high on Wednesday as optimism over monetary easing in the U.S. and the eurozone economies sparked massive foreign buying, analysts said. The local currency gained sharply against the U.S. dollar.
The benchmark Korea Composite Stock Price Index rose 14.35 points, or 0.73 percent, to close at 1,990.47, marking the highest level since Oct. 1, when it finished at 1,991.54. Trading volume was moderate at 359.4 million shares worth 4.87 trillion won ($4.43 billion), with winners outpacing losers 463 to 345.
Foreigners snapped up a net 221.9 billion won worth of local shares, extending their buying streak to three consecutive sessions. Institutions bought a net 60.6 billion won, while retail investors dumped a net 274.4 billion won.
"The European Central Bank will start its quantitative easing program from March with the Greek debt rescheduling issue wrapped up. And U.S. Fed Chair Janet Yellen said last night she will be patient before raising interest rates," said Kim Ji-hyung, a market analyst at Hanyang Securities Co. "These two cases signaled that the two biggest central banks will pump abundant liquidity into the market."
The much awaited supplies of liquidity raised investors' appetite for riskier assets in emerging countries, he said.
"The foreign capital inflow will likely push up the KOSPI to the landmark 2,000 point level sometime in March," said Kim. "But the index needs momentum at home to break away from the narrow-range box."
The KOSPI has never gone beyond the 2,100-point plateau since it closed at 2,121.27 on Aug. 2, 2011.
Most shares finished in positive territory, led by large-cap exporters.
Tech giant Samsung Electronics gained 0.88 percent to 1,379,000 won, and LG Electronics rose 0.49 percent to 61,500 won.
Leading chemicals company LG Chem jumped 3.83 percent to 230,500 won, and Hanwha Chemical increased 2.64 percent to 13,600 won.
Builders finished bullish, with industry leader Hyundai Engineering & Construction rising 3.64 percent to 48,450 won and Daewoo Engineering & Construction soaring 7.66 percent to 7,450 won.
Retail giant Lotte Shopping jumped 4.25 percent to 257,500 won after announcing it hasn't decided whether to buy an Italian duty free retailer, World Duty Free S.p.A.
The local currency ended at 1,099 won against the U.S. dollar, up 10.9 won from Tuesday's close.
Bond prices, which move inversely to yields, ended sharply higher. The yield on three-year Treasurys sank 2.6 basis points to 2.037 percent, and the return on the benchmark five-year government bonds slid 4 basis points to 2.131 percent. (Yonhap)