South Korean shares closed at their highest in almost 22 months on Tuesday, as key exporter stocks gained on expectations the ratification of a free trade agreement (FTA) with Chile would boost shipments.
Optimism over the trade deal with Chile drove LG Electronics Inc, the world's biggest maker of air conditioners, 5.1 percent higher to 66,000 won, while auto-makers including Hyundai Motor also gained.
"The FTA deal is a positive factor for the long term, and exporter shares are expected to remain bullish this year given hopes of sustained earnings momentum amid a global economic recovery," said Song In-ho, a fund manager at Kyobo Investment Trust Management.
The benchmark Korea Composite Stock Price Index (KOSPI) finished up 0.40 percent at 884.80 points, the highest close since April 24, 2002 when it ended at 915.69.
Shares in Hyundai Motor, which gets 60 percent of its revenue from exports, climbed 3.11 percent to 49,800 won, and its auto parts making affiliate, Hyundai Mobis Co, jumped 4.61 percent to 59,000 won.
Hyundai Motor shares got a further boost as Merrill Lynch raised its 12-month target price to 60,000 won from 53,000 won and its 2004 earnings per share estimate by six percent, citing growing export margins and expectations of a recovery in domestic sales.
Market participants said they were keeping tabs on the Korean won's appreciation against the dollar, but believed the current level was tolerable.
Trade volume stood at 423.5 million shares, compared with 438.0 million on Monday. Turnover was valued at 2.63 trillion won versus 2.78 trillion won. Gainers topped losers by 366 to 359, with 81 stocks unchanged.
The March KOSPI 200 futures index ended up 0.35 points at 116.20 and the underlying KOSPI 200 spot index rose 0.40 points to 116.03.
The junior Kosdaq was down 0.28 percent at 444.88.
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