Seoul shares hit yearly high on bold stimulus package

South Korean stocks on Friday reached a new high for 2014, bolstered by expectations that government stimulus measures may boost the local economy, analysts said.

Starting the day in positive territory, the benchmark Korea Composite Stock Price Index rose to 2,036.20 at one point during the trading session before finishing at 2,033.85, up 0.36 percent, or 7.23 points, from Thursday’s close.

Trading volume was modest at 264.51 million shares worth 3.85 trillion won ($3.73 billion), with advancers outpacing decliners, 478 to 320, and 78 staying pat.

“Expectations about economic stimulus programs are exerting upward momentum,” said Lim Dong-rak, a researcher at Hanyang Securities.

He said a steady influx of funds into the stock market from abroad and local institutions helped the bourse overcome inertia that caused the index to falter in the past two trading sessions.

South Korea’s new economic team said Thursday that it will implement a 41 trillion won stimulus program with emphasis placed on domestic spending. The move comes after Seoul revised down its growth outlook for this year to 3.7 percent from 4.1 percent.

The latest gains were, moreover, helped by upbeat U.S. job market data that showed the world’s biggest economy continuing to grow at a steady pace.

Foreign investors, who exert considerable influence on the market, maintained a net buying streak for the ninth day in a row, helping push up the bourse. Net buying by institutions contributed to the gains, and offset offloading of shares by private investors.

Tech giant Samsung Electronics, the flagship company of Samsung Group, stayed flat at 1,355,000 won per share, with global appliance manufacturer LG Electronics giving up 1.30 percent to 76,000 won. Memory chip giant SK hynix also lost 0.11 percent to 47,500 won.

The country’s No. 1 carmaker, Hyundai Motor, surrendered 0.66 percent to 227,500 won, while its smaller affiliate, Kia Motors, gained 1.61 percent to 56,800 won. Kia said in a regulatory filing earlier in the day that its net dropped 13.3 percent in the April-June period.

Shares of top steelmaker POSCO gained 1.72 percent to 326,000 won while leading shipbuilder Hyundai Heavy Industries moved down 0.58 percent to 170,000 won. Stocks belonging to Hyundai E&C, the country’s top builder, rose 1.47 percent to 62,100 won.

The South Korean won rose against the U.S. dollar. The local currency ended at 1,025.9 won to the greenback, up 2.7 won from the previous session.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasury dipped 0.3 basis point to 2.494 percent, and the return on the benchmark five-year government bonds fell 0.5 basis points to 2.712 percent. (Yonhap)