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Seoul: Shares and won rise in volatile trade after China's cuts rates
[SEOUL] Seoul shares rose on Wednesday as sentiment improved after China's central bank cut interest rates and lowered bank reserve requirements to support a faltering economy and to brake a major sell-off in share markets.
The Korea Composite Stock Price Index (KOSPI) was up 1.2 per cent at 1,868.75 points as of 0224 GMT, while winners outnumbered losers by 3.6 to 1.
"Markets in the world reacted differently to China's additional measures," said Kim Young-jun, an analyst at SK Securities. "Local markets have been undervalued recently on a variety of uncertainties, compared with Wall Street, so local stock markets recovered on China's stimulus news - in the short run." Persistent foreign selling weighed on the main bourse. Offshore investors were set to be net sellers for a 15th consecutive session, offloading a net 316 billion won (S$372) million) worth of KOSPI shares by midday.
Technology giant Samsung Electronics Co Ltd was down 2.5 per cent.
Shares in car-makers continued to rise as investors calculated a weak won would improve their export earnings. Hyundai Motor Co Ltd and Kia Motors Corp gained 1 and 1.4 per cent, respectively.
LG Electronics Inc gained 5.1 per cent on expectations of improved earnings in the TV manufacturing division and on bargain-hunting.
In currencies, the South Korean won rebounded against the dollar in volatile trade as Chinese shares avoided further sharp falls during the session.
The South Korean won was up 0.5 per cent at 1,188.7 on the dollar from the previous close of 1,195.3. "Market participants are cautiously keeping an eye on China share markets, but they expect shares in China won't drop sharply thanks to the stimulus measures," said Yuna Park, a foreign-exchange analyst at Donbu Securities.
Mr Park noted that concerns over Chinese share markets would still keep the won under pressure.
September futures on three-year treasury bonds were up 0.01 points at 109.50.