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Seoul: Shares post sharpest gain in 3 months on Fed's corporate bond buying plan
[SEOUL] South Korean shares surged 5.3 per cent on Tuesday, the sharpest daily gain in nearly three months, as the U.S. Federal Reserve's plan to purchase corporate bonds boosted investors' risk appetite.
The Seoul stock market's main Kospi closed up 107.23 points, or 5.28 per cent, at 2,138.05, posting the sharpest daily percentage gain since March 25.
The Fed said it will start purchasing corporate bonds on Tuesday through the secondary market corporate credit facility.
South Korea's vice finance minister warned on Tuesday that the country's stock market may see increased volatility after a recent surge in the number of retail investors in stocks.
The Korea Exchange said on Tuesday sidecars were activated on the benchmark Kospi and the junior Kosdaq , halting programme trading for five minutes, for the first time since March 24.
A sidecar temporarily suspends stock trading to alleviate shocks from market turbulence.
It is worrying that the number of coronavirus infections is rising around the metropolitan Seoul area, yet it is a different question how the stock market reacts to it, said Lim Dong-min, an analyst at Kyobo Securities.
South Korea reported 34 new coronavirus cases on Tuesday, of which 21 were domestic infections.
Foreigners were net buyers of US$76.84 million worth of shares on the main board.