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(LEAD) S. Korean shares rise on Samsung rally

All News 15:56 October 06, 2016

(ATTN: ADDS bond yields at bottom)

SEOUL, Oct. 6 (Yonhap) -- South Korean stocks rose Thursday with a boost from Samsung Electronics after a U.S. hedge fund urged the world's largest smartphone maker to split into holding and operating firms. The Korean won strengthened against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) added 12.3 points, or 0.6 percent, to close at 2,065.3. Trade volume was moderate at 332.83 million shares worth 5.23 trillion won (US$4.7 billion), with decliners outnumbering gainers 448 to 348.

Shares of Samsung Group affiliates rallied after U.S. hedge fund Elliott Management on Thursday urged the crown jewel of South Korea's largest conglomerate to split into two. Elliot then recommended the tech giant list the operating company on the NASDAQ stock exchange and pay a special dividend, raising hopes that it could increase returns to shareholders.

The New York-based activist fund last year opposed the merger of two Samsung affiliates, but it lost the lengthy, uphill battle.

"The Elliott event has brought renewed attention to Samsung Electronics' non-operating asset values," Kim Seon-woo, an analyst at Meritz Securities, said. "Samsung Electronics has already vowed to return more to shareholders and the fund's pressure could help the company make solid gains in its share prices on rising expectations for corporate restructuring."

Foreigners and retail investors bought a net 101.14 billion won and 46.94 billion won, respectively, while institutions sold a net 155.49 billion won.

Market kingpin Samsung Electronics increased 4.45 percent to 1,691,000 won after the company said that it will "carefully consider" Elliot's proposal. Its share prices hit a record high of 1.7 million won in early trading after its announcement.

Samsung C&T, a construction arm that serves as the group's de-facto holding firm, jumped 7.89 percent to 164,000 won to become the nation's fourth-largest company by market value.

Samsung Life Insurance, a life insurer of the conglomerate that plays a key role in the group's cross-shareholding structure, rose 4.31 percent to 109,000 won.

The local currency closed at 1,112.2 won against the U.S. dollar, up 1.5 won from Wednesday's close.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 0.5 basis point to 1.321 percent and the return on the benchmark five-year government bond added 1.2 basis points to 1.341 percent.


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