Seoul: Stocks, won jump on Sino-US trade truce, oil price gain

[SEOUL] South Korea's Kospi stock index and the won rose sharply on Monday as a Sino-US trade truce and a rally in oil prices boosted investor sentiment.

China and the United States agreed to halt additional tariffs in a deal that keeps their trade war from escalating as the two sides try again to bridge their differences with fresh talks aimed at reaching a deal within 90 days.

Brent futures rose US$2.86 to trade at US$62.32 a barrel, while US crude gained US$2.66 to US$53.59.

South Korean factory activity in November contracted again after a brief two months of growth, as new export orders shrank by the most in over five years, a private survey showed on Monday, a sign of increasing stresses on businesses from a slow down in the global economy.

The Kospi closed 35.07 points, or 1.67 per cent, higher at 2,131.93, boosted by tech giant Samsung Electronics and other large caps, including LG Chem and Posco. The index posted its biggest gain since Nov 2.

The results of the meeting between US President Donald Trump and his Chinese counterpart Xi Jinping on Sunday and the oil price rally boosted global market, said Lee Kyoung-min, an analyst with Daishin Securities, adding that the gains would likely be limited as there has not been any official statement and details were not clear.

However, the possibility of a second United States-North Korea summit and the North Korean leader's visit to Seoul will likely boost the market, Mr Lee added.

Cyclical stocks jumped, with steelmaker Posco and LG Chem, the country's biggest chemical firm, gaining 4.9 per cent and 5.6 per cent, respectively. Shipbuilders and construction-related firms also rose. Doosan Heavy Industries and Construction Co Ltd and Ssangyong Cement Industry Co Ltd ended 2.6 per cent and 4.1 per cent higher, respectively.

The won was quoted at 1,110.7 per dollar on the onshore settlement platform, 0.95 per cent firmer than its previous close at 1,121.2, posting its biggest gain since Nov 2.

In offshore trading, the won was quoted at 1,109.97 per US dollar, up 0.85 per cent from the previous day, while in one-year non-deliverable forwards it was being asked at 1,091.15 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 2.14 per cent, after US stocks ended the previous session with mild gains. Japanese stocks rose 1 per cent.

The Kospi is down around 15.0 per cent so far this year, and up by 2.75 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.

The trading volume during the session on the Kospi index was 428,908,000 shares and, of the total traded issues of 894, the number of advancing shares was 648.

Foreigners were net buyers of 322,737 million won worth of shares.

The US dollar has risen 4.09 per cent against the won this year. The won's high for the year is 1,053.55 per dollar on April 2, 2018 and low is 1,146.26 on Oct 11, 2018.

In money and debt markets, December futures on three-year treasury bonds fell 0.06 point to 108.88.

The South Korean three-month Certificate of Deposit benchmark rate was quoted at 1.9 per cent, while the benchmark three-year Korean treasury bond yielded 1.923 per cent, higher than the previous day's 1.90 per cent.

REUTERS