Seoul: Korean stocks rise; brush off capital outflow concerns over Fed rate hike

[SEOUL] South Korea's Kospi stock index ended higher on Thursday, having reopened after a three-day national holiday, as it shrugged off concerns over capital outflows after the US Federal Reserve raised interest rates as expected. The won also rose while bond yields fell.

There were possibilities that the Fed rate hike could negatively affect the market, but investors seem to be paying more attention to when the rate hike cycle will end, says Kim Sung-hwan, an analyst at Bookook Securities. The market seems to be tolerant to the US-China trade spat, as some view it as a noise event ahead of the US midterm election in November, Mr Kim added. At 06:30 GMT, the Kospi closed up 16.26 points or 0.70 per cent at 2,355.43, extending gains to a third consecutive session.

South Korean policymakers said risk of major foreign capital flow is not big, expecting limited impact from the widely-expected US rate hike. The won was quoted at 1,112.5 per US dollar on the onshore settlement platform, 0.25 per cent firmer than its previous close at 1,115.3. In offshore trading, the won was quoted at 1,112.97 per US dollar, up 0.22 per cent from the previous day, while in one-year non-deliverable forwards it was being transacted at 1,096 per US dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.10 per cent, after US stocks ended the previous session with mild losses. Japanese stocks weakened 0.99 per cent. The Kospi is down around 5.2 per cent so far this year, and up by 1.54 per cent in the previous 30 days. The current price-to-earnings ratio is 12.10, the dividend yield is 1.28 per cent and the market capitalisation is 1,242.04 trillion won.

The trading volume during the session on the Kospi index was 273,887,000 shares and, of the total 898 traded issues, the number of advancing shares was 522. Foreigners were net buyers of 229,572 million won worth of shares. The U.S dollar has risen 4.37 per cent against the won this year. The won's high for the year is 1,053.55 per dollar on April 2 and the low is 1,140.4 on July 19.

In money and debt markets, December futures on three-year treasury bonds rose 0.02 points to 108.32. The Korean 3-month Certificate of Deposit benchmark rate was quoted at 1.65 per cent, while the benchmark 3-year Korean treasury bond yielded 2.01 per cent, lower than the previous day's 2.03 per cent.

REUTERS