Seoul: Stocks end higher on foreign buying after Fed rate cut
[SEOUL] South Korean shares closed more than 2 per cent higher on Wednesday, as a weaker US dollar due to the surprise rate cut by the US Federal Reserve pushed foreign investors to buy domestic stocks.
The won was one of the strongest among Asian currencies, while the benchmark bond yield fell.
Foreigners purchased a net 150 billion won (S$175.2 million) worth of shares on the main board, snapping seven consecutive sessions of selling.
The US dollar hovered near five-month lows versus the yen after the Fed's 50 basis points rate-cut sparked more anxiety about the impact of the coronavirus.
The jump in Kospi was mainly driven by foreign buying as investors sought "foreign-exchange profit on weakening dollar after Fed's out-of-meeting rate cut", Bookook Securities analyst Lee Won said.
South Korea announced a stimulus package of 11.7 trillion won to cushion the economic impact of the outbreak in the country that has recorded more than 5,300 cases and a death toll of 32.
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The Bank of Korea said it will take the Fed's decision into account in conducting its policies going forward and pledged to take market stabilising measures if needed.
The Kospi surged 45.18 points, or 2.2 per cent, to 2,059.33. During the session, the benchmark clocked the biggest daily gain since Feb 6.
Heavyweights Samsung Electronics and SK Hynix closed up 3.6 per cent and 1.6 per cent, respectively.
The won was quoted at 1,187.8 per US dollar on the onshore settlement platform, 0.6 per cent higher than its previous close at 1,195.2.
In offshore trading, the won was quoted at 1,187.1 per US dollar, down 0.6 per cent from the previous day, while in non-deliverable forward trading, its one-month contract was quoted at 1,186.0 per US dollar.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 per cent, while the Shanghai Composite Index rose 0.4 per cent.
The trading volume was 591.76 million shares. Of the total traded issues of 905, the number of advancing shares was 732.
The Kospi has fallen 6.29 per cent so far this year, while the won has lost 2.6 per cent against the US dollar.
In money and debt markets, March futures on three-year treasury bonds rose 0.28 point to 111.67, while the three-month certificate of deposit rate was quoted at 1.4 per cent in late afternoon trade.
The most liquid three-year Korean treasury bond yield fell by 7.1 basis points to 1.035 per cent in late afternoon trade, while the benchmark 10-year yield fell by 6.3 basis points to 1.306 per cent.
REUTERS
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