The Korea Herald


Seoul stocks finish higher on US Fed's dovish signal

By Yonhap

Published : Aug. 28, 2020 - 16:05

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(Yonhap) (Yonhap)

South Korean shares closed higher Friday on the US Fed Reserve's dovish gesture, but gains were trimmed due to the heightened social distancing level in the greater Seoul area. The Korean won rose against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) rose 9.35 points, or 0.4 percent, to close at 2,353.8. Trading volume was high at about 1.3 billion shares worth some 15.3 trillion won ($12.9 billion), with gainers outnumbering losers 583 to 253.

Foreigners sold a net 229 billion won, while retail investors bought a net 117 billion won and institutions purchased a net 118 billion won.

Stocks came to a bullish start, after the index plunged 1.05 percent the previous session due to spreading new COVID-19 cases.

The gains were largely attributed to the overnight speech by Federal Reserve Chairman Jerome Powell. He said the Fed may continue efforts to support the pandemic-hit economy even if US inflation exceeds its target level of 2 percent, which global markets hailed as a sign of a prolonged low-interest rate.

"After the Powell event, local stock markets turned to absorbing the sold-off stocks," Kiwoom Securities analyst Seo Sang-young said.

"But at the time, the resurgence in the virus outbreaks is pressuring the economy," he added.

Stocks erased more than half of morning gains, as investors were spooked by the government's decision to strengthen the quarantine scheme by a half notch to Level 2.5.

Under social distancing Level 2.5, set to be in effect from Sunday to Sept. 6, only takeaway and deliveries are permitted after 9 p.m. in restaurants and bakeries in the greater Seoul area.

Health Minister Park Neunghoo said the government will "prepare to raise the level of social distancing to (the highest) Level 3 at any time" if the numbers do not flatten.

Most large caps closed lower on the main bourse.

Market bellwether Samsung Electronics fell 0.36 percent to 55,400 won, with No. 2 chipmaker SK hynix losing 1.64 percent to 77,800 won.

Internet portal giant Naver retreated 1.19 percent to 333,000 won, and its rival Kakao dipped 1.22 percent to 405,500 won.

Top pharmaceutical company Samsung Biologics shed 0.25 percent to 799,000 won, with Celltrion closing flat at 304,500 won.

Leading chemical maker LG Chem slid 0.39 percent to 759,000 won, and rechargeable battery maker Samsung SDI lost 0.64 percent to 466,000 won.

Among gainers, Hyundai Motor, the country's largest automaker, climbed 5.2 percent to 172,000 won.

The local currency closed at 1,184.3 won against the US dollar, up 0.7 won from the previous session's close.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 4.1 basis points to 0.8937 percent, and the return on the benchmark five-year government bond added 4.3 basis points to 1.175 percent. (Yonhap)