Seoul: Shares rise after central bank's expected half-point rate hike
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SOUTH Korean shares rose on Wednesday (Jul 13), lifted by automakers and internet companies, and as the central bank hiked its benchmark interest rate by 50 basis points, which was in line with expectations.
The Korean won strengthened, while the treasury bond yields dropped.
The benchmark Kospi ended up 10.85 points or 0.47 per cent at 2,328.61, after 2 sessions of decline.
The Bank of Korea (BOK) raised its policy interest rate by an unprecedented half point on Wednesday, aiming to pull inflation from 24-year highs while balancing fear of a sharp economic downturn as business activity flounders.
After the rate decision, the BOK Governor Rhee Chang-yong said that a return to a quarter point hikes seemed appropriate for the time being, unless inflation were to accelerate significantly beyond the bank’s projection.
With the BOK providing a specific forward guidance, uncertainties around the monetary policy eased, leaving a positive impact on the market, said Samsung Securities’ analyst Seo Jung-hun.
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Still, investors were cautiously awaiting US inflation data scheduled for release later in the day.
Automakers Hyundai Motor and Kia rose 2.51 per cent and 1.4 per cent, respectively, while internet platform companies Naver rose 1.71 per cent and Kakao gained 2.28 per cent.
Among the heavyweights, technology giant Samsung Electronics inched down 0.17 per cent, but peer SK Hynix rose 0.75 per cent. Battery maker LG Energy Solution lost 0.25 per cent.
Foreigners were net sellers of 100.9 billion won (S$108.7 million) worth of shares on the main board.
The won ended 0.4 per cent higher at 1,306.9 per dollar on the onshore settlement platform.
In offshore trading, the won was quoted down 0.1 per cent at 1,307 per dollar.
The most liquid 3-year Korean treasury bond yield dropped by 9.5 basis points to 3.199 per cent, while the benchmark 10-year yield fell by 5.4 basis points to 3.301 per cent. REUTERS
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