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Seoul: Stocks gain ahead of Fed meeting; won weakens

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[SEOUL] South Korea's Kospi stock index inched up on Monday ahead of the Federal Open Market Committee meeting which begins on Tuesday, where the US central bank is widely expected to raise interest rates.

The Korean won and bond yields fell.

US consumer spending gathered momentum in November which could further allay fears of a significant slowdown in the American economy, standing in stark contrast to reports from China showing a dramatic fall-off in retail sales in the world's second-largest economy and from Europe where a key measure of business activity expanded at its slowest rate in four years.

The upbeat data from the Commerce Department on Friday bolstered expectations that the Federal Reserve will raise interest rates for a fourth time this year at its Dec 18-19 policy meeting, despite moderating inflation and tighter financial market conditions.

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South Korea's export growth was revised down to 4.1 per cent to US$51.8 billion, while import growth was revised up to 11.5 per cent. The country's trade balance reached US$4.93 billion, achieving a trade surplus continuously since February 2012, according to trade ministry data.

At 0155 GMT, the Kospi was up 3.34 points or 0.16 per cent at 2,072.72. Shares in the biotech drug arm of the parent group of tech giant Samsung Electronics fell more than 6 per cent after the company said on Thursday its head office has been raided by South Korean prosecutors as part of a criminal probe into alleged accounting fraud.

The won was quoted at 1,132.2 per US dollar on the onshore settlement platform, 0.12 per cent weaker than its previous close at 1,130.8.

In offshore trading, the won was quoted at 1,131.6 per US dollar, up 0.01 per cent from the previous day, while in one-year non-deliverable forwards it was being transacted at 1,109.95 per US dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.04 per cent, after US stocks ended the previous session with losses. Japanese stocks rose 0.54 per cent.

The Kospi is down around 16.1 per cent so far this year, and up by 1.27 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 (S$ 1.51 trillion).

The trading volume during the session on the Kospi index was 182,590,000 shares and, of the total traded issues of 887, the number of advancing shares was 312.

Foreigners were net sellers of 12,307 million won worth of shares.

The US dollar has risen 6.12 per cent against the won this year. The won's high for the year is 1,053.55 per US dollar, hit on April 2 and its low is 1,146.26, reached on Oct 11.

In money and debt markets, December futures on three-year treasury bonds rose 0.02 points to 109.21.

The Korean 3-month Certificate of Deposit benchmark rate was quoted at 1.9 per cent, while the benchmark 3-year Korean treasury bond yielded 1.777 per cent, lower than the previous day's 1.78 per cent.

REUTERS