SEOUL, Oct 17: Seoul shares rose on Thursday as U.S. Lawmakers passed legislation to avert a debt default and end a partial government shutdown, while foreign investors were poised to extend their net buying streak to a record 35th session.
The Korea Composite Stock Price Index (KOSPI) was up 0.2 percent at 2,038.96 points as of 0227 GMT after touching 2,052.44, its highest intraday level since March 20 last year.
During the morning session, the U.S. House of Representatives passed legislation to avoid a damaging default and reopen shuttered agencies, hours after the Senate also approved the bill. President Barack Obama had said earlier he would promptly sign the bill into law.
‘With an end nearing on the Washington stalemate, investors are finally able to concentrate on global economic recovery and corporate earnings,’ said Tong Yang Securities analyst Lee Jae-mahn.
‘The current relief rally can turn stronger if China GDP data due Friday is in line with market expectations,’ he added.
China will release slew of data on Friday including gross domestic product, industrial output and retail sales. China’s GDP growth is expected to quicken to 7.8 percent in the third quarter from a year earlier, according to a Reuters poll.
Foreign investors purchased a net 97.4 billion won ($91 million) worth of local shares on Thursday morning, on track for a 35th consecutive session of buying. That would surpass the previous record streak set during the first quarter on 1998.
Lee Seung-joon, an analyst at Hi Investment & Securities, said the South Korean market would continue to enjoy foreign inflows as low valuations of local stocks alongside firm market fundamentals make it stand out from other emerging markets.
From Aug. 23 through Wednesday, overseas investors bought a net 11.8 trillion won worth of stocks. The KOSPI jumped 9 percent over that period.
Despite the buying surge, Barclay’s Equity Research noted that foreign ownership in South Korean equities, at 34.6 percent, is still below the historical average of 35.4 percent and its peak of 44 percent since 2001.
On Thursday, technology and auto shares remained in favour for their low valuations and strong correlation to the U.S. Economy.
Samsung Electronics Co Ltd, the most favoured stock by foreign investors during their buying streak, gained 0.9 percent. SK Hynix Inc rose 0.5 percent and Naver Corp gained and 1.7 percent.
Hyundai Heavy Industries Co Ltd, the world’s largest shipbuilder, rose 2.3 percent.
Declining shares outnumbered gainers 432 to 344.
The KOSPI 200 benchmark of core stocks edged up 0.4 percent, while the junior KOSDAQ slipped 0.5 percent. ($1 = 1065.5750 Korean won)
(AGENCIES)
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