Seoul: Stocks, won steady as US-North Korea summit concludes

[SEOUL] South Korean shares and the won reacted calmly on Tuesday to the United States-North Korea summit, which ended just before Seoul financial markets closed for the day and did not impact prices. Analysts said South Korean markets had priced in a successful summit in Singapore, and were not affected immediately by the result.

The benchmark Kospi index (Kospi) , which briefly inched back into positive territory mid-session, closed virtually unchanged, down 0.05 per cent at 2,468.83. The won closed at 1,077.2 against the dollar, down 0.19 per cent versus Monday's close of 1,075.2.

"Market players already have priced in some kind of peace treaty. There are downside risks to growth fundamentals in emerging economies, so it would take more than just shared understanding on denuclearisation to move the ball," said Kim Doo-un, an analyst at KB Investment & Securities. He was referring to recent upswings in the Kospi as the index rose seven of the past nine sessions.

"The peace on the Korean peninsula could deliver significant benefits to both North and South Korea, including potentially a re-rating for South Korean stocks," DBS said in a report before the summit ended. "However, it would be prudent to contain excessive optimism, given the enormous gulf between the two Koreas and the costs of reunification," DBS added.

Mr Trump and Mr Kim signed a two-page document in Singapore and confirmed the common goal of "a nuclear free Korean Peninsula", but the document did not explicitly define the scope of denuclearisation. The steam came out of some South Korean stocks that could potentially benefit from inter-Korea projects after weeks of rallying leading up to the summit, on profit-taking. Hyundai Cement , which could benefit from infrastructure projects for the North, declined 9 per cent while Hyundai Elevator fell 3.6 per cent. Market heavyweights such as Samsung Electronics and SK Hyunix edged down 1 per cent and 0.9 per cent, respectively.

Offshore investors were on track to be net sellers for the day, offloading 123 billion won of Kospi shares at closing. Declining issues outnumbered advancing ones 492 to 323. June futures on three-year treasury bonds rose 0.02 points to 107.92.

REUTERS