Seoul shares edge up on gains in steelmakers, defensive shares

South Korean stocks closed higher Wednesday, led by gains in defensive shares and steelmakers, amid worries that the soaring local currency may weaken exporters’ profitability, analysts said. The won closed at near six-year high.

The benchmark Korea Composite Stock Price Index inched up 5.92 points, or 0.3 percent, to 1,998.95. Trading volume was moderate at 230 million shares worth 4.69 trillion won ($4.51 billion), with gainers outpacing losers 472 to 331.

The index opened higher, tracking an overnight advance in the U.S. stock market, but lost some of its earlier gains as major exporters such as Samsung Electronics and Hyundai Motor suffered a decline on the back of a stronger local currency, which ended at an almost six-year high to the U.S. dollar. A firmer won to the greenback usually leads to a fall in local exporters’ overseas sales. (Yonhap)

“Exporters’ fall limited the overall market gain on the won’s sharp ascent to the U.S. dollar,” said Kim Yong-koo, an analyst at Samsung Securities. “But foreigners are snatching up such major exporters, and their exposure to currency volatility is less than people think.”

The local currency closed at 1,041.45 won to the U.S. dollar, up 10.75 won from Tuesday’s close.

The won rose to as high as 1,040.10 during morning trade, the highest in almost six years, but its upward move was limited due to speculation that the country’s foreign exchange authorities may intervene.

Samsung Electronics, the world’s largest maker of smartphones, suffered a 1.65 percent decline to close at 1,371,000 won, and LG Electronics, Samsung’s smaller local rival, shed 1.3 percent to end at 68,300 won.

Hyundai Motor, the country’s top automaker, shed 2.01 percent to close at 243,500 won, and its smaller affiliate Kia Motors lost 2.47 percent to end at 59,200 won.

Steelmakers gathered ground on expectations that the rising won would reduce costs of raw materials. Industry leader POSCO advanced 2.81 percent to end at 315,500 won, and No. 2 player Hyundai Steel jumped 4.86 percent to end at 73,300 won.

Some defensive shares also closed higher. Power supplier Korea Electric Power Corp. advanced 4.02 percent to end at 38,850 won, and Korea Gas rose 1.88 percent to end at 64,900 won.

Top mobile operator SK Telecom advanced 0.99 percent to close at 204,000 won, and No. 2 player KT shot up 4.32 percent to end at 32,600 won on news that its voluntary retirement scheme for senior employees would help cut costs.

Brokerage shares also rose on news that the country’s financial authorities are moving to ease regulations in the sector.

Samsung Securities jumped 2.46 percent to end at 41,600 won, and Woori Investment & Securities rose 3.78 percent to close at 9,340 won. (Yonhap)