Seoul: Shares climb to 4-week high on ECB stimulus; won firmer

[SEOUL] South Korean shares powered to a four-week intraday high on Friday as market players cheered the launch of a massive bond-buying stimulus programme by the European Central Bank (ECB).

The Korea Composite Stock Price Index (KOSPI) was up 0.7 per cent at 1,934.22 points as of 0210 GMT.

The ECB took the ultimate leap in its easing policy on Thursday, saying it would buy hundreds of billions of euros worth of sovereign debt to boost the euro zone's flagging economy.

"QE is not a silver bullet and we will need to wait until the second quarter until we can determine if it's had the desired effect on propping up the real economy," said HI Investment & Securities in a note to clients.

"But for now, this move has earned the confidence of the financial markets," it added.

Brokerages outperformed the broader market as equity investors worldwide relished the prospects of ample liquidity from the ECB.

Korea Investment Holdings rallied 5.1 per cent while NH Investment & Securities gained 4.3 per cent.

Commodity-linked shares were the other notable winners on the day after oil prices jumped, with LG Chem rising 2.2 per cent and Samsung Heavy adding 3.2 per cent.

The rally was broad-based, with 14 out of the 17 major industry sectors tracked by the bourse operator trading in positive territory.

Shares in Kia Motors fell 0.5 per cent however, with investors taking a cautious stance ahead of the automaker's fourth-quarter earnings guidance which is due to be released later in the day.

The KOSPI 200 benchmark of core stocks was up 0.81 per cent while the junior, tech-heavy KOSDAQ rose 0.96 per cent.

The South Korean won was slightly firmer on Friday morning, as broad dollar strength was outweighed by foreign purchases of domestic equities.

The local currency was quoted at 1,083.1 to the dollar as of 0210 GMT, compared to 1,084.9 seen at the end of Thursday's session.

March futures on three-year treasury bonds added 9 basis points to trade at 108.50.

Data on Friday showed South Korea's economy slowed sharply in the fourth quarter to hover around six-year lows, heaping more pressure on the central bank to deliver another rate cut.

REUTERS