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Seoul: Stocks jump to 2-month high, won up on positive US data
[SEOUL] South Korean shares and the won rose early on Wednesday, following positive US economic data and China's cut in banks' reserve requirement ratio (RRR), both of which augured well for demand in key South Korean export markets.
The Korea Composite Stock Price Index (KOSPI) was up 1.4 per cent at 1,943.56 points as of 0201 GMT. It rose to its highest intraday level since Jan 4 this year shortly after markets opened.
Baek Chan Gyu, a strategist at KB Securities in Seoul, said the easing biases in the European Union and Japan, China's recent move to support the economy and growing market views that the Bank of Korea may cut interest rates were all positive for stocks.
The Institute for Supply Management's (ISM) index of factory activity, a closely-watched measure of the US manufacturing sector, beat expectations in February. Construction spending also scaled a more than eight-year high last month.
The US data came after China's central bank said it was cutting the RRR, or the amount of cash that banks must hold as reserves, by 50 basis points.
The strategist added recent US data were positive for South Korean equities as it boosted hopes for improved global growth as Asia's fourth-largest economy has been suffering from weak exports.
Most heavyweights on South Korea's main bourse were up on Wednesday, with shares in steelmaker Posco rising 5.5 per cent in early trade.
Samsung Electronics Co Ltd was up 1.9 per cent while shares in semiconductor maker SK Hynix gained 2.8 per cent.
Foreign investors net purchased 173.2 billion Korean won (S$196.68 million) worth of KOSPI shares near midday, set to become net buyers for a fourth straight session.
Winners outnumbered losers 551 to 241.
Gains in the South Korean won were more modest, as the local currency was up just 0.2 per cent from Monday's onshore close of 1,236.7.
Traders said importers US dollar demand stopped the won from rising further, while some market participants chose to keep to the sidelines after Moody's Investor Service downgraded the outlook for China's government bond rating to negative from stable on Wednesday.
March futures on three-year treasury bonds were down 0.05 points to trade at 110.28.
South Korean markets were closed on Tuesday for a national holiday.