UNSC’s vote on NK to pose little impact on stocks: analysts

A vote by the United Nations Security Council to implement further sanctions on North Korea would have limited impact on South Korea’s stock market, analysts here said Monday, amid signs of geopolitical risks abating on the market.

The stock market in Korea bounced back from Friday losses. The first-tier Kospi closed at 2,359.08, up 0.66 percent, while the secondary Kosdaq rose 0.34 percent.

Shares of tech giants and financial sectors saw an upturn. Handset maker Samsung Electronics jumped 1.47 percent to 2,490,000 won ($2,199) and semiconductor maker SK hynix climbed up 1.65 percent.

All four major commercial banking groups rose, with Hana Financial Group at the front, rising 2.02 percent in its closing. The sector had suffered falls of between 9 percent and 12 percent in August.

The planned UN Security Council vote to impose sanctions on North Korea will pose little threat to the market, according to analysts.

“Markets will remain unaffected (after the vote),” Seo Sang-young, an analyst at Kiwoom Securities, told The Korea Herald. “The news on possible renewed sanctions on North Korea is making headlines now, but the risk-sensitive currency exchange rate showed limited fluctuation (on Monday).”

At the session’s close, the Korean won weakened by 4.4 won against the dollar, which was trading at 1,131.9 won. 

Ma Ju-ok of Hanwha Investment & Securities, also told The Korea Herald that the pending sanctions “appeared to be merely supplementary to the  existing ones,” which would have a limited impact on the markets.

South Korea had braced for an additional North Korean military provocation last weekend, as its Foundation Day was Saturday, in the wake of its sixth nuclear test involving an underground hydrogen bomb detonation on Sept. 3.

The Kospi took a 1.61 percent loss during the three days after the test, but rebounded 1.14 percent Thursday.

North Korea celebrated its Foundation Day without military action.

“The Kospi drew a clear bottom line at 2,300 (despite August threats), while export-driven stocks are expected to push the market upward, riding moderate global economic settings.” Ma of Hanwha Investment & Securities wrote in a note.

Seo of Kiwoom Securities wrote that US lawmakers’ decision to carry out a stimulus package for Hurricane Irma disaster relief, as well as China’s upbeat producer price index Saturday would trigger an influx into Korean stock markets.

Another analyst, Yoon Young-kyo of Cape Investment & Securities, wrote Monday that major players in the IT and bank sectors had already “hit the bottom.”

Gold price on the Korea Exchange fell 0.61 percent to 48,580 won per gram Monday from Friday’s close at 48,880 won, the highest in 10 months.

Bond markets were moderate when closed. The three-year treasury yield edged down 0.001 percentage point, while the 30-year bond yield ticked up 0.009 percentage point.

By Son Ji-hyoung 
(consnow@heraldcorp.com)