Seoul: Stocks rise as rate cut bets remain high

[SEOUL] South Korean shares ended firmer on Tuesday as rising bets on policy easing by major central banks shifted investors' focus to high-yield dividend stocks, lifting finance and securities firms. The won weakened slightly, while the benchmark bond yield rose.

South Korea's central bank chief suggested he was ready to cut the policy interest rate further by saying that he does not rule out a situation requiring more policy response after last week's rate cut.

Expectations that the European Central Bank and the US Federal Reserve will cut interest rates boosted stocks globally.

Due to rising expectations of interest rate cuts, investors eyed high-yield dividend stocks such as securities companies and oil companies, said Cho Byung-hyun, an analyst at Yuanta Securities Korea. As a trade dispute between South Korea and Japan develops, worries about a glut in memory chip supply eased, boosting South Korean chipmakers, he added.

The major finance sub-index and the minor securities sub-index rallied 1 per cent and 0.9 per cent, respectively. Shares of S-Oil and SK Innovation jumped more than 2 per cent each.

South Korea's SK Hynix gained nearly 3 per cent before trimming its gains. Its shares closed up 0.5 per cent, rising 13.38 per cent so far this month.

The Seoul stock market's main Kospi index closed up 8.11 points, or 0.39 per cent, at 2,101.45 points.

South Korea's economy probably returned to growth in the second quarter after a surprising contraction in the first, helped mainly by government spending, a Reuters poll found. Foreigners were net buyers of 287.2 billion won worth of shares on the main board.

The won was quoted at 1,178.9 per dollar on the onshore settlement platform, 0.05 per cent lower than its previous close at 1,178.3.

In offshore trading, the won was quoted at 1,178.9 per U.S. dollar, down 0.3 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,176.8 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.12 per cent, after U.S. stocks gained . Japanese stocks rose 0.95 per cent.

The Kospi has risen 2.96 per cent so far this year, but lost 0.3 per cent in the previous 30 trading sessions.

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.

The trading volume during the session on the Kospi index was 640.01 million shares and, of the total traded issues of 895, the number of advancing shares was 289.

The won has lost 5.4 per cent against the US dollar so far this year.

In money and debt markets, September futures on three-year treasury bonds fell 0.01 points to 110.74, while the 3-month Certificate of Deposit rate was quoted at 1.59 per cent.

The most liquid three-year Korean treasury bond yield rose by 0.3 basis point to 1.337 per cent, while the benchmark 10-year yield rose by 0.3 basis point to 1.468 per cent.

REUTERS