(ot) 23:53 DJS World Markets: South Korean Shares Surge 5.2% Saturday
23:53 DJS World Markets: South Korean Shares Surge 5.2% Saturday
NEW YORK -(Dow Jones)- Share prices on the Korea Stock Exchange surged
5.2% Saturday, as investors cheered Moody's rating on the country's
won-denominated bonds.
Moody's Investors Service assigned a Baa1 rating to the bonds Friday,
saying that it reflects South Korea's prior record of balanced budgets and
takes into account fiscal costs associated with restructuring the financial
system and providing a large fiscal stimulus to the economy this year and
next.
The Kospi index gained 24.37 points to close at 490.71 in Saturday's
half-session of trading. Seoul is one of the few markets with Saturday
trading. Advancing issues overwhelmed decliners 615 to 202, with 60 stocks
ending unchanged. A total of 155 shares soared by their daily maximum highs,
while 12 fell by the day's limit lows.
"The assignment on the country's won-denominated bonds spurred
expectations that the foreign agency may upgrade the country's sovereign
rating to investment level from current noninvestment," said Han Suk-chul, a
senior analyst at KFB Securities Co.
There have been expectations that foreign agencies, such as Standard &
Poor's and Moody's, may upgrade the country's sovereign rating in the first
half of next year, supported by restructuring in the country's financial
sector and views that the sluggish local economy may soon hit a bottom.
Supported by such hopes, local institutional investors and foreigners were on
a buying spree during the half-day session, said analysts. The key index
surged by as much as 29.79 points during the day's trading.
Meanwhile, Latin American stock markets closed mostly lower Friday,
paced by a sell-off of more than 4% in Venezuela ahead of Sunday's
presidential election.
In Europe, strong U.S. economic data gave a boost to several stock
markets, although shares in Frankfurt closed modestly lower and other markets
ended off the session's best levels despite a rebound on Wall Street.
Earlier Friday, Asia's main stock markets lost ground in the wake of
sharp losses Thursday on Wall Street and in Brazil.
In Latin America Friday, share prices on the Caracas Stock Exchange
finished sharply lower as nervous investors reduced their positions ahead of a
possible victory by Hugo Chavez in Sunday's election, according to traders.
The Caracas General Stock Index closed down 169.39 points, or 4.1%, at
3919.28. Investors took profits and reduced their exposure to Venezuelan
equities on concern that Chavez will best market-friendly candidate Henrique
Salas Romer.
"Friday was your last chance to sell. If you didn't, you may be stuck
holding shares under a Chavez presidency," one broker quipped.
The uncertainty of a Salas victory increased Friday when pollsters
predicted a likely Chavez win. Urban-area polls conducted this week by major
Venezuelan polling companies Datanalisis and Consultores 21 showed Chavez
holding a lead of 15-20 percentage points against Salas.
Foreign and local investors are worried that Chavez, who touts
nationalist nd populist policies, will win the race and then roll back
economic reforms implemented by Venezuelan President Rafael Caldera.
Brokers expect the Caracas market to rally on Tuesday if Salas manages
a surprise victory on Sunday. Financial markets and banks are closed Monday in
celebration of a religious holiday.
Brazilian stocks backed off from earlier gains to trade lower after
tumbling 8.8% Thursday on disappointment over a legislative setback to the
government's fiscal reform effort. Brazil's Bovespa index closed down 80
points, or 1%, at 7626. The index plunged 742 points Thursday.
Brazil's president, Fernando Henrique Cardoso, vowed to reintroduce the
controversial deficit-reduction measure shot down late Wednesday by the lower
house of Congress, while The Wall Street Journal reported analysts and
legislative leaders predict the setback won't derail Brazil's effort to fix
its finances. Cardoso's fiscal austerity package is a prerequisite before
Brazil can receive $41.5 billion in International Monetary Fund aid.
"Turbulence will persist until early next year," predicted Silvio
Camargo, head of institutional equities sales at Banco Fator in Sao Paulo.
"The 12-month outlook is good, though."
Elsewhere in the region, in Buenos Aires the Merval index ended down
2.53 points, or 0.55%, at 450.59, following a 6.6% skid Thursday, but Mexico
City's IPC index closed up 59.64 points, or 1.6%, at 3759.83 after a drop of
3% Thursday. Traders said Mexico's market closely tracked the Dow Jones
Industrial Average, which climbed 136.46 points, or 1.5%, Friday.
In Europe, many markets climbed as strong U.S. employment growth in
November helped Wall Street to rebound from sharp losses Thursday. Nonfarm
payrolls rose by 267,000 in November, pushing the unemployment rate down to a
28-year low of 4.4% from 4.6% in October. Several European markets extended
gains carved out Thursday amid coordinated interest-rate cuts by 11 euro-zone
central banks. However, late profit-taking tugged key indexes to a modestly
lower close in Frankfurt and pulled other markets in Europe off their best
levels.
In London, the benchmark FT-SE 100 index closed up 15.8 points, or
0.3%, at 5581.9, but the market's tone remained distinctly nervous after a
week of upheavals. The FT-SE remains almost 300 points shy of where it
finished last week, following big reversals on Monday and Tuesday.
Meanwhile in Frankfurt, the DAX index closed floor trading down 11.85
points, or 0.25%, at 4775.23. The Xetra DAX, which tracks electronic trades,
fell 9.58, or 0.2%, to close at 4802.76. The early gains on Wall Street had
only a limited impact on the German market. Industrial giant Siemens posted
its lowest share price for a month, closing down 8.20 marks, or 7.4%, at
102.80 marks, after analysts were disappointed by a conference in the wake of
Thursday's annual earnings conference. Thursday, Siemens revealed low
earnings-per-share for 1998, a fall in full-year pretax profit and the
prospect of a higher tax burden in the current fiscal year, which continued to
undermine the badly performing stock Friday, dealers said.
Paris's CAC 40 index rose 22.92 points, or 0.6%, to end at 3738.59, on
the back of Thursday's European rate cuts, a stronger dollar and the better
start on Wall Street.
Among other European markets, Amsterdam's AEX index rose 15.12 points,
or 1.4%; Brussels' Bel-20 index edged up 0.43 point; Madrid's IBEX-35 rose
52.3 points, or 0.6%; Milan's Mibtel climbed 163 points, or 0.7%; Stockholm's
Swedish General index closed up 15.80 points, or 0.5%; and the Zurich Swiss
Market Index gained 9.4 points, 0.1%.
However, Moscow's RTS index fell another 1.38 points, or 2.1%. Russian
stock prices closed down again Friday on continued light volume, on some
profit-taking and general malaise due to renewed doubts about the economic
direction of the country, traders said. Trading volume was also significantly
lower at $2.8 million, down from $5.8 million Thursday.
Russian financial markets have been jolted in the past few days by
weakness in global equity markets and new inflationary fears that led to a
steep decline in the ruble.
Concerns about the state of the country's finances were exacerbated
Wednesday, after International Monetary Fund Managing Director Michel
Camdessus wound up a two-day visit to Moscow without giving any indication of
when the IMF might resume its loan program to Russia.
As a result, Russia's cash-strapped government is likely to be forced
to print money to cover its huge budget deficit, which is projected at around
100 billion rubles (about $5.11 billion) for 1999.
The Dow Jones Stoxx Index of 665 European companies closed up 1.06
points, or 0.4%, at 262.95, while the Dow Jones Euro Stoxx Index, which tracks
326 companies in countries joining the single currency, ended up 1.21 at
278.59.
Earlier in Asia, stocks finished moderately lower in Tokyo and Hong
Kong. Japan's benchmark Nikkei 225 index lost 57.11 points, or 0.4%, to close
at 14639.97, extending Thursday's 289-point decline. Losers edged winners 2 to
1.
In Hong Kong, the blue-chip Hang Seng index lost 83.01 points, or 0.8%,
to close at 9963.14. Thursday, it slipped 9.63 points, or 0.1%.
After the market closed, the territory's de facto central bank, the
Hong Kong Monetary Authority, lowered a key interest rate - the savings rate -
by a quarter percent, the third such cut since October.
Traders cited Thursday's declines on Wall Street and Latin American
markets, as well as recent strength in the dollar, for the losses.
Traders said Japanese export-oriented companies' shares lost ground due
to the recent slide by the dollar against the yen, which hurts their profits
from abroad when they're repatriated back into yen.
On the plus side, stocks rallied in Seoul on rising optimism that
debt-saddled South Korean conglomerates are speeding up their restructuring
efforts. The key Korea Stock Price Index, known as the Kospi, surged 18.23
points, or 4.1%, to 466.34.
Copyright (c) 1998 Dow Jones & Company, Inc.
All Rights Reserved.
12/04 11:53p CST
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