Seoul: Stocks rise on brighter China outlook, strong foreign buying

SOUTH Korean shares rose on Tuesday (May 31) to their highest in 5 weeks, led by foreigners’ strong buying on improved sentiment regarding China’s economic outlook. The Korean won hit a near 6-week high, while the benchmark bond yield jumped.

The benchmark Kospi ended up 16.24 points, or 0.61 per cent, at 2,685.90, its highest close since May 2.

For the month, the index fell 0.34 per cent, extending losses to a second straight month after a 2.27 per cent decline in April.

China’s cabinet announced a series of new policy measures on Tuesday to bolster the economy, while its factory activity contracted at a slower pace in May as Covid-19 curbs in major manufacturing hubs were relaxed.

Positive investor sentiment on China affected stock markets across Asia and led to a strong inflow of foreign money into the local market, said Eugene Investment and Securities’ analyst Huh Jae-hwan.

Among the heavyweights, Samsung Electronics fell 0.44 per cent but peer SK Hynix rose 0.93 per cent. Battery maker LG Energy Solution gained 1.02 per cent while its parent company LG Chem jumped 5.03 per cent.

Foreigners were net buyers of 1.06 trillion won (S$1.2 billion) worth of shares on the main board, marking their biggest daily purchase since Aug 31, 2021.

The won was last quoted at 1,237.2 per dollar on the onshore settlement platform, 0.11 per cent higher than the previous session and the highest close since Apr 20.

South Korea’s won currency strengthened 1.51 per cent against the dollar for the month, ending a 2-month falling streak with its best performance since April 2021.

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In offshore trading, the won was quoted at 1,237.3 per dollar, down 0.2 per cent from the previous day, while in non-deliverable forward trading its 1-month contract was quoted at 1,236.7.

In money and debt markets, June futures on 3-year treasury bonds fell 0.25 point to 105.44 in late afternoon trade.

The most liquid 3-year Korean treasury bond yield rose by 9.7 basis points to 3.03 per cent, while the benchmark 10-year yield jumped by 12.1 basis points to 3.326 per cent. REUTERS