Financial market recovering: Bahk

Seoul shares extend run of gains


Finance Minister Bahk Jae-wan Wednesday vowed to closely monitor the market as it stabilizes on improved prospects.

“Financial markets at home and abroad are stabilizing ... but concerns over possibly drawn-out fiscal woes in Europe and an economic slowdown in the U.S. still remain,” Finance Minister Bahk told an economic policy coordination meeting held in central Seoul.

“We need to closely monitor market conditions and take action in a preemptive manner.”

Seoul shares extended their gain for a second day as foreign investors continued to buy stocks, for now relieved that the Korean economy may absorb external shocks better this time.

The benchmark KOSPI advanced another 0.68 percent to close at 1,892.67 after gaining as much as 4.8 percent the previous day. It shot above the 1,900 level at around 2 p.m. for the first time in six days, driven by foreign buying. The junior KOSDAQ gained 2.06 percent and finished at 506.44.

Investor sentiment recovered Tuesday as foreign investors became net buyers for the first time in nine sessions. Market uncertainty stemming from Standard & Poor’s historic downgrade of the U.S. sovereign debt pushed the local index down almost 14 percent in the past two weeks.

“The index hovered around 1,700 last week because fundamentals of the Korean economy was in doubt and the market consensus was that it will not be able to absorb external shocks well,” Kim Hyung-ryol, an analyst at Kyobo Securities said.

The local currency lost 1.5 won against the greenback to close at 1071.3 after trading at a relatively narrow range of 1075.3 and 1070.5 for the day. Analysts attributed the won’s retreat to the negative economic reports about European economies which is adding uncertainty to the global recovery.

“Seoul stocks are beginning to prove the economy’s resilience, but the test isn’t over yet until third quarter earnings come positive for sure,” Kim said.

Samsung Electronics gained 0.27 percent to 752,000 won apiece, and LG lost 4.31 percent to 62,200 won on lower-than-expected earnings report for the first half of this year. Hyundai Motor Co. was down 1.23 percent at 200,500 a share.

By Cynthia J. Kim (cynthiak@heraldcorp.com)