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Seoul: Shares rise, won holds steady after Fed decision
[SEOUL] Seoul shares climbed to a more than one-month high in volatile trade on Friday, underpinned by non-cyclical shares, as the US Federal Reserve kept interest rates unchanged overnight.
The Korea Composite Stock Price Index (KOSPI) was up 0.6 per cent at 1,988.12 as of 0232 GMT. It touched a high of 1,996.47 in early trade, the highest intraday level since Aug 11. Winners outnumbered losers by 16 to 10. "There's no effect from the Fed's rate decision overnight in the stock market as it priced in the negative effect from the Fed's probable rates hike in the year," said Kang Hyun-gie, a stock analyst at Dongbu Securities. "In such a circumstance, with gloomy economy outlook, growth stocks - cosmetics and pharmaceuticals - and non-cyclical shares bolster the market, today as well." The US Fed held rates steady overnight in a bow to worries about the global economy, financial market volatility and sluggish inflation at home, but left open the possibility of a modest policy tightening later this year.
Pharmaceutical shares outperformed the broader market, up 4.6 per cent. LG Life Sciences Ltd was up 11 per cent, and Green Cross Corp gained 6.6 per cent.
Cosmetics maker Amorepacific Corp and Korea Kolmar Co Ltd rose 4 per cent and 4.7 per cent, respectively.
Shares related to food and beverages, typical non-cyclical equities, also climbed 3.1 per cent.
Meanwhile, the sub-index for banks underperformed the broader market, down 3 per cent with Shinhan Financial Group Co Ltd falling 3.8 per cent and Industrial Bank of Korea losing 3.2 per cent.
Foreigners were net sellers, offloading a net 23.1 billion won (S$27.7 million) of shares on the main board.
South Korean government bond prices rose on growing possibility of a rate cut amid concerns over upcoming economic indicators by the Bank of Korea after the US Fed's rate decision.
December futures on three-year treasury bonds were up 0.17 points at 109.63.
The won remained flat and stood at 1,166.1 against the dollar in choppy trade.
Yuna Park, a foreign-exchange analyst at Dongbu Securities, said there was a possibility that the dollar would resume its bullish tone as the US Fed is expected to raise rates either in October or December, while uncertainties still remain in the market, which pressure the Asian currency.