Auto parts makers and shipping shares rose on expectations their revenue will rise with the start of Korea-U.S. FTA in a market that barely moved on Wednesday.
The KOSPI inched up 0.22 percent to close at 2028.65, with gains led by auto parts maker Mando Corp., Hyundai Mobis Co., each rising 1.85 percent to 165,500 won and 1.62 percent to 281,500 won.
The pact, which will take effect on March 15, calls for the elimination of 2.5 percent to 10 percent duties on auto parts.
“The 2.5 percent tax on auto parts will immediately be eliminated as the trade pact between Korea and U.S. takes effect next month,” Seo Sung-moon, an analyst at Korea Investment & Securities said.
“Mando especially is a major beneficiary to this as tax on tires will be phased out across the next five years,” Seo added.
“Exporters, such as autos, techs and machineries, are expected to receive a boost, and although the bourse may not immediately reflect such developments, there will at least be no negative repercussions,” said Ma Ju-ok of Kiwoom Securities Co. The KOSPI remained relatively flat as investors paused on oil prices spiking to a nine month high.
Mando, maker of tires and breaks, jumped more than 5 percent in the morning, leading other auto parts makers into positive territory when the index swung between gains and losses on concerns that the oil price above $105 would crimp business sentiment again. Hankook Tire Co. closed 1.71 percent higher at 44,600 won.
Hyundai Motor Co. and Kia Motor Corp. lost 1.1 percent and 1.24 percent respectively, as expectations for their gains on tax elimination is offset by growing
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portion of overseas sales.
Shipping and logistics companies also gained on long-term outlook that their sales will rise with overall growth of trade with the U.S.
Korean Air Co., dropped 0.38 percent to 52,800 a share however, on rising oil prices. Samsung C&T Corp. gained 1.04 percent to 77,500 apiece.
The trade pact, initially made by late President Roh Moo-hyun and then President George W. Bush in 2007 was ratified by the National Assembly in November. The deal stands to benefit auto, technology and machineries and hurt agriculture sector. The outlook is neutral for financial and services industry.
The junior KOSDAQ remained nearly flat, rising only 1.14 points to 544.20. The won lost 0.3 percent to 1,126 against greenback, snapping three-day gains.
By Cynthia J. Kim (
cynthiak@heraldcorp.com)
