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Seoul: Shares recover as China stocks stabilise; won slightly up
[SEOUL] South Korean shares reversed initial losses and rose on Tuesday morning, following a rebound in China stocks, but investors remained cautious as support for local stocks could be short-lived in a volatile trading environment.
The Korea Composite Stock Price Index (KOSPI) was up 0.8 per cent at 1,934.38 points as of 0233 GMT.
A South Korean finance ministry official said on Tuesday the government will take action to stabilise markets if needed, following a meeting of ministry officials a day after a steep plunge in Chinese stocks set off falls on the local bourse.
Lee Jae-man, a stock analyst at Hana Daetoo Securities, said investors had initially been panic-stricken by the collapse in China stocks, but the situation now appears not to be as bad as first thought.
Lee added that shocks in the Chinese markets would subside over time as negative factors such as big "national team"institutions selling stocks and companies launching new IPOs had been in effect for some time.
Shares in recently-battered brokerages advanced, with Samsung Securities Co Ltd and Mirae Asset Securities Co Ltd rising 2.6 per cent and 4.6 per cent, respectively.
Steelmaker POSCO rose 2.7 per cent, and memory chip maker SK Hynix Inc gained 2.5 per cent.
Foreigners were expected to extend a 21-straight day bout of net selling, offloading a net 18.8 billion won (S$22.58 million) worth of KOSPI shares on the main board by midday.
The South Korean won rebounded slightly as the yuan currency firmed after suspected intervention by China's central bank, while China's weak factory activity surveys seemed not to affect the currency market for too long.
The won was quoted up 0.2 per cent at 1,185.6 on the dollar, compared with the previous onshore close of 1,187.7.
March futures on three-year treasury bonds edged down 0.02 points at 109.72.