Seoul: Shares rise on central bank's dovish stance; bond yields dive

SOUTH Korean shares ended higher on Wednesday (Oct 12), led by chipmakers, as investors hoped for a slowdown in monetary tightening after the central bank revealed a more dovish colour. The Korean won jumped, while the benchmark bond yield dropped.

The benchmark Kospi ended up 10.4 points or 0.47 per cent at 2,202.47. The index started the session lower, but reversed course to trade higher following a news conference by the Bank of Korea (BOK) governor.

The BOK raised interest rates by a half-percentage point on Wednesday, as expected by 23 of 26 economists in a Reuters poll.

Still, BOK Governor Rhee Chang-yong said after the rate decision meeting that most board members saw its terminal policy rate around 3.5 per cent, and some even lower, fanning expectations of a slower tightening path ahead among investors.

“The rate decision itself had little impact as it was in line with expectations, but the governor’s comment of 3.5 per cent during the news conference was interpreted dovish and provided support to the market,” said Choi Yoo-june, an analyst at Shinhan Investment and Securities.

Leading gains in the index were chipmakers on news that their operations in China would not be disturbed by US restrictions. Samsung Electronics rose 0.72 per cent while SK Hynix jumped 4.21 per cent.

Foreigners were net buyers of shares worth 238.6 billion won (S$240.7 million) on the main board, extending their buying streak to an eighth straight session.

The won ended 0.72 per cent higher at 1,424.9 per dollar on the onshore settlement platform. In offshore trading, the won was quoted up 0.5 per cent at 1,424.

In money and debt markets, December futures on three-year treasury bonds jumped 0.71 point to 102.24.

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Seoul: Shares fall 1.8% in post-holiday session

The most liquid three-year Korean treasury bond yield dropped by 23.3 basis points to 4.109 per cent, while the benchmark 10-year yield fell 18.7 basis points to 4.117 per cent. REUTERS