Seoul: Shares, won rise on central bank's rate hike; bond yields soar

SOUTH Korean shares rose more than 1 per cent on Thursday (Aug 25), with investors cheering the central bank’s better-than-expected growth outlook and an interest rate hike in line with expectations. The won strengthened, while the benchmark bond yield surged.

The benchmark Kospi ended up 29.81 points, or 1.22 per cent, at 2,477.26, rising for a second straight session.

South Korea’s central bank raised its key interest rate by a quarter-percentage point.

The rate hike had neutral impact on the stock market, as it was in line with expectations, while the market took a positive note from the central bank’s assessment of smaller chance for economic recession, said Choi Yoo-june, analyst at Shinhan Financial Investment.

The Bank of Korea (BOK) cut its projections for economic growth only slightly to 2.6 per cent this year from 2.7 per cent previously, before slowing further to 2.1 per cent in 2023.

The BOK significantly lifted its inflation forecasts, signalling more policy tightening, sending bond yields and the local currency higher.

Among heavyweights, technology giant Samsung Electronics rose 1.19 per cent and peer SK Hynix gained 0.97 per cent, while battery maker LG Energy Solution advanced 1.77 per cent.

Foreigners were net buyers of shares worth 41.5 billion won (S$43.2 million) on the mainboard, extending their buying streak to eighth day.

The won was last quoted at 1,335.2 per dollar on the onshore settlement platform, 0.52 per cent higher than its previous close.

SEE ALSO

Seoul: Shares snap 5-session losing streak on robust foreign inflows

In offshore trading, the won was quoted up 0.4 per cent at 1,335.4 per dollar, while in non-deliverable forward trading its one-month contract was quoted at 1,333.8.

In money and debt markets, September futures on 3-year treasury bonds dropped as much as 0.71 point to 103.95 in late afternoon trade.

The most liquid 3-year Korean treasury bond yield surged by as much as 20.7 basis points to 3.527 per cent, while the benchmark 10-year yield jumped by as much as 16.3 basis points to 3.596 per cent, marking their highest since June 30. REUTERS