Seoul: Stocks surge as Fed chief boosts rate cut expectations

[SEOUL] South Korean shares soared on Thursday, after US Federal Reserve chairman Jerome Powell set the stage for a rate cut later this month, while leading chipmakers extended a rally in Seoul. The won gained 0.7 per cent, while the benchmark bond yield fell.

The benchmark Kospi stock index closed up 21.80 points, or 1.06 per cent, at 2,080.58.

Mr Powell confirmed that the US economy was still under threat from disappointing factory activity, tame inflation and a simmering trade war, saying the central bank stands ready to "act as appropriate".

Following Mr Powell's remarks on Wednesday, investors are almost certain of a rate cut by the US central bank, said Na Jeong-hwan, an analyst at DS Investment & Securities. Bargain hunting by foreigners lifted chipmakers, he added.

Shares in Samsung Electronics and SK Hynix closed up 1.4 per cent and 3.6 per cent, respectively, on expectations that Japan's export curbs may ease a supply glut of South Korean memory chips.

Still, the dispute between South Korea and Japan over wartime forced labour would affect South Korea's economic growth, said Shaun Roache, Asia-Pacific chief economist at S&P Global Ratings.

South Korea's ruling party also announced that up to about 300 billion won would be included in a supplementary budget bill to cope with the export restrictions.

Foreigners were net buyers of 362.7 billion won worth of shares on the main board.

The won was quoted at 1,173.5 per dollar on the onshore settlement platform, 0.69 per cent higher than its previous close at 1,181.6.

In offshore trading, the won was quoted at 1,173.6 per US dollar, up 0.2 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,172.4 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.72 per cent, after US stocks touched new highs. Japanese stocks rose 0.51 per cent.

The Kospi has risen 1.98 per cent so far this year, and gained 0.5 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 365.11 million shares and, of the total traded issues of 895, the number of advancing shares was 644.

The won has lost 4.9 per cent against the US dollar so far this year.

In money and debt markets, September futures on three-year treasury bonds rose 0.07 points to 110.54, while the three-month Certificate of Deposit rate was quoted at 1.78 per cent.

The most liquid three-year Korean treasury bond yield fell by two basis points to 1.417 per cent, while the benchmark 10-year yield fell by 1.6 basis points to 1.545 per cent.

REUTERS