South Korean Shares Climb 1.8% to Record
Main Stock Index Benefits From Spending Optimism And Decline in Oil Prices
A WALL STREET JOURNAL NEWS ROUNDUP
September 8, 2005; Page C14
SEOUL, South Korea -- South Korea's key stock index rose to a record, as a drop in oil prices, stronger cues from the U.S. markets and improving optimism for a steady recovery of local consumption lifted investor confidence and sparked broad-based buying.
The Korea Composite Stock Price Index, or Kospi, gained 1.8% or 20.34 points, to 1142.99, passing the previous record of 1138.75 set Nov. 8, 1994.
The record is the latest milestone in South Korea's resurgence from the brink of economic collapse seven years ago. Overinvestment and poor fiscal management at the time sparked a run on the country's currency, leading to a bailout from the International Monetary Fund and major restructuring at most of Korea's largest companies.
The Kospi surged past 1000 in late February, amid signs that consumer spending was recovering and would again drive economic growth. But it tumbled in mid-March as profit weaknesses emerged at several large companies.
It hovered near 1000 for most of June and hasn't closed below that level since June 29. In late July, the index shot above 1100, flirted with its record level in mid-August, but then fell below 1100 on Aug. 24. It closed higher seven of the past 10 sessions to set the record yesterday.
Trading yesterday was led by auto maker Hyundai Motor Co., which rose 6.9% to 79,000 won ($77.07). Samsung Electronics Co. gained 1.8% to 579,000 won and shipbuilder Hyundai Heavy Industries Co. advanced 4.3% to 74,500 won.
Kookmin Bank gained 2.3% to 54,600 won, and Samsung Securities Co. rose 5.4% to 34,950 won.
Positive U.S. economic data, including an unexpected gain in the Institute of Supply Management's nonmanufacturing index and a report showing growth in the U.S. service sector, also improved sentiment.
"Optimism that the market will rally further is prevailing now, given the abundant market liquidity and positive economic environment, although oil prices remain worrisome," said Hwang Chang Joong, an analyst at Woori Investment & Securities.
But some analysts warned of a possible correction as soon as today, saying that some of the recent gains came as short sellers, who bet on market declines, bought shares to cover recent losses.
"Although I expected the market to reach a record, this is a bit too fast," said Lim Chang Gue, a fund manager at Samsung Investment Trust Management. "As they say here, the higher the peak, the bigger the correction." |
