South Korean shares end at one-year high on US debt deal, AI optimism

SEOUL: Round-up of South Korean financial markets:

South Korean shares gained 1% on Tuesday and hit their highest level in nearly a year, as investors priced in optimism from the U.S. debt ceiling agreement, while chipmakers extended gains on euphoria surrounding artificial intelligence (AI).

The Korean won and the benchmark bond yield were flat.

The benchmark KOSPI ended up 26.71 points, or 1.04%, at 2,585.52, marking its biggest daily rise since April 11 and highest closing level since June 10, 2022.

U.S. President Joe Biden and House Speaker Kevin McCarthy finalised a budget agreement during thr weekend to suspend the $31.4 trillion debt ceiling until Jan. 1, 2025.

The local stock market was on holiday on Monday, when the news boosted risk appetite across the broader Asian market.

Chipmakers Samsung Electronics and SK Hynix jumped 2.84% and 1.01%, respectively, in their continued rally on expectations that the ongoing race for AI technologies would accompany higher demand for chips.

“There is a possibility the chipmakers will go through some short-term correction, but the rally is more likely to continue through the second half of this year with improvement in the industry trend and AI-related hopes,” said analyst Seo Sang-young at Mirae Asset Securities.

Of the total 933 issues traded, 457 shares rose.

Foreigners were net buyers of shares worth 673 billion won ($509.49 million).

The won ended onshore trade at 1,324.9 per dollar.

money and debt markets, June futures on three-year treasury bonds fell 0.10 point to 104.03.

The most liquid three-year Korean treasury bond yield rose 3.3 basis points to 3.560%, while the benchmark 10-year yield climbed 0.4 basis point to 3.649%.