South Korean stocks rose to the highest level in nearly nine months on Friday, cheered by hopes that Washington will soon work out ways to settle its political deadlock over the debt ceiling, analysts said. The local currency edged up against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) jumped 23.50 points, or 1.17 percent, to finish at 2,024.90, the highest since Feb. 20. Trading volume was light at 245.5 million shares worth 4.44 trillion won ($4.11 billion) with gainers far outstripping decliners 537 to 257.
Analysts said although the talks between Republicans and the White House fell through after U.S. President Barack Obama rejected the House's proposal, it is part of the negotiations to resolve the impasse over the partial government shutdown and raise the debt ceiling to avert a sovereign default.
"Investors expect the debt ceiling negotiations will reach an agreement (despite President Obama's rejection) before the deadline and that will reduce U.S. risks on the local stock market," said Kim Soon-young, an analyst at IBK Securities Co.
House Republicans proposed a bill to raise the federal debt limit in return for resuming negotiations on the partial government shutdown. That sent U.S. markets to their strongest rally on Thursday in nearly 10 months.
However, after the closing bell, President Obama rejected the plan, U.S. media reported.
Foreigners continued their buying streak on the Seoul bourse, scooping up a net 159.2 billion won, with institutions also buying a net 122.7 billion won. Retail investors, however, sold off a net 276.1 billion won.
Most large-cap shares finished the session bullish, led by financial blue-chips. Shinhan Financial Group soared 2.6 percent to 45,350 won, with KB Financial Group surging 5.97 percent to 39,950 won. Analysts cited a brighter forecast on banks' next quarter results as reasons that fueled their gains.
Kia Motors, the smaller unit of Hyundai Motor, fell 0.62 percent to 64,600 won, while SK hynix, the chip giant, slid 0.74 percent to 33,350 won.
The local currency ended at 1,071.40 won against the greenback, up 2.2 won from Thursday's close, largely on the back of the KOSPI's gain, dealers said. (Yonhap News)
