South Korean stocks surge; up 50pc from March lows as techs lead relief rally

SEOUL: South Korean stocks surged nearly 3pc to close at a more than three-month high on Wednesday, led by bluechips such as Samsung Electronics and Hyundai Motor and as global economic recovery hopes offset concerns over Sino-U.S. tensions.

The benchmark KOSPI ended up 2.87pc at 2,147, its highest closing level since Feb. 21, before the global spread of the novel coronavirus.

The index is also up nearly 50pc from its March lows, in the steepest equity relief rally across Asia, aided by the government handling the COVID-19 crisis well.

"...bold fiscal expansion and monetary easing have been supporting stock prices even as economic indicators yet show clear signs of improvement," said Choi Seok-won, head of SK Securities' research centre.

Chip giants Samsung Electronics and SK Hynix surged over 6pc each, while Hyundai Motor Co gained 5.9pc after its global sales jumped.

"Investors appear to be rushing to buy stocks on belief that economic situations will gradually improve towards next year," said Yoon Ji-ho, head of eBEST Investment & Securities' research centre, adding, factors such as the U.S. election and future virus development need to be considered.

Foreigners bought net 204.1 billion won ($167.83 million) worth of shares on the main board, but they have offloaded shares worth around 23.3 trillion won so far this year.

Tariq Dennison, managing director at GFM Asset Management in Hong Kong, roughly doubled a small exposure to Korea in March, mostly through buying KOSPI futures and index-tracking funds.

"I thought Korea as a whole market was a high-quality market that was really too cheap to stay that cheap," he said, adding that he still thought the market is attractive "but we don't feel the same level of hurry that we did in March."

The won ended 0.71pc higher at 1,216.8 per dollar on the onshore settlement platform, in its strongest daily gain since April 10.

The most liquid 3-year Korean treasury bond yield rose by 0.1 basis points to 0.861pc in late afternoon trade, while the benchmark 10-year yield rose by 3.4 basis points to 1.421pc.