Seoul shares up 0.34% despite U.S. debt talk failure

South Korean stocks closed 0.34 percent higher on Tuesday as hopes for seasonal shopping demand and positive U.S. economic data outweighed the fallout from failed U.S. debt-reduction talks, analysts said. The local currency lost ground against the U.S. dollar.

After a weak open, the benchmark KOSPI strengthened 6.25 points to 1,826.28. Trading volume was moderate at 261.4 million shares worth 3.82 trillion won ($3.33 billion), with decliners outnumbering gainers 443 to 368.

“The impact of the U.S. debt talk failure was limited as it was partly expected. The market also had confidence that the situation won’t get worse as in August when a debt talk impasse led to the country’s first-ever credit downgrade,” said Lim Dong-lak, an analyst at Hanyang Securities Co.

On Monday, members of the U.S. Congressional Joint Select Committee, also known as the super committee, admitted to being deadlocked over a deal to increase taxes and cut spending.

Despite the political wrangling, global credit rating agencies Standard & Poor’s and Moody’s Investors Service said they will retain the current credit rating on the U.S., relieving investors.

“Anticipation of the upcoming Black Friday shopping rush as well as continued stock buying by institutions and pensions bolstered the KOSPI,” Lim said.

Blue chips led the rise. Market bellwether Samsung Electronics rose 1.37 percent to 963,000 won and leading auto-parts maker Hyundai Mobis climbed 1.62 percent to 313,500 won.

KEPCO Engineering & Construction, an affiliate of state-run utility Korea Electric Power Corp. (KEPCO), surged 5.34 percent to 90,700 won on hopes the government will step up efforts to foster the nuclear power industry.

In contrast, top zinc smelter Korea Zinc slid 3.03 percent to 319,500 won, tracking a recent retreat in gold prices.

Energy companies took a blow from overnight falls in oil prices. Industry leader SK Innovation slipped 0.61 percent to 163,500 won and smaller player Honam Petrochemical slumped 3.69 percent to 313,000 won.

The local currency ended at 1,145.3 won against the greenback, down 4.6 won from Monday’s close, amid a weak euro and the KOSPI’s recent weak performance, dealers said. 

(Yonhap News)