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South Korea: Stocks rise as Trump agrees to meet North Korea's Kim
[SEOUL] South Korean shares rose on Friday as investors hoped tensions on the Korean peninsula will ease after US President Donald Trump agreed to meet North Korean leader Kim Jong Un by May.
The Korea Composite Stock Price Index (Kospi) was up 1.7 per cent at 2,474.09 points as of 0127 GMT, touching a nine-day high as Mr Trump accepted an invitation to meet Kim in what would be the first-ever US-North Korea summit.
The South Korean won edged up 0.1 per cent to 1,069.1 per dollar, while the 5-year CDS premium reached near two-month low of 43/44 basis points.
The lower the number, the smaller the expected risk of a bond default, as it tracks the cost of insuring the bond.
"Clearly, investors are excited," said Kim Doo Un, an economist at Hana Financial Investment. "Many would see the summit as a chance to potentially relieve the so-called Korea discount."
Korea discount is a term often used to describe the phenomenon of Korea stocks and bonds being undervalued due to the unique geopolitical risks South Korea faces.
South Korean shares with exposure to North Korea rallied.
Hyundai Elevator, the biggest stakeholder in Hyundai Asan which has engaged in a number of North Korea-related projects, surged 11.4 per cent, while Shinwon Corp, which used to operate factories in the Kaesong industrial region near the Demilitarized Zone, jumped 5 per cent.
Market heavyweight Samsung Electronics rose 2.2 per cent, while LG Electronics rose 1.8 per cent.
Foreigners were net buyers of 117,709 million won worth of shares.