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Seoul stocks slightly rebound on Fed's rate cut hope

All News 15:56 June 05, 2019

SEOUL, June 5 (Yonhap) -- South Korean stocks closed slightly higher Wednesday, as the U.S. Federal Reserve signaled willingness to cut rates, boosting investor sentiment that remains fragile amid trade tension between the United States and China. The local currency sharply rose against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) added 2.14 points, or 0.1 percent, to 2,069.11. Trading volume was moderate at 372.8 million shares worth 4.37 trillion won (US$3.7 billion), with winners outnumbering losers 515 to 310.

Market sentiment rose after Fed Chairman Jerome Powell left the door open for rate cuts later this year to bolster the world's largest economy against the escalating trade war between the world's top two economies.

But the gains were limited as foreigners remained net sellers for the second straight session.

South Korea's current account balance turned to the red in April, the first deficit in seven years, caused by flagging exports and increased dividend transfers.

"The Federal Reserve chief's hinting at a rate cut was a positive factor for the local stock market, but it could lead to outflows of foreign funds in the long term," Yoon Ji-seon, an analyst at BNK Securities, said. "Institutional buying supported the index as pension funds are picking up local stocks."

Institutions and retail investors bought a net 97.98 billion won and 56.7 billion won worth of local stocks, respectively, while foreigners dumped a net 155.4 billion won to be in a selling mode for the second day in a row.

Tech heavyweights were mixed. Market kingpin Samsung Electronics gained 1.04 percent to 43,900 won, while SK hynix, the world's No. 2 memory chip maker, finished flat at 65,100 won.

Auto shares advanced as the government decided to extend a temporary tax cut on purchases of passenger cars until the end of this year.

Hyundai Motor, the nation's top automaker, increased 1.44 percent to 141,000 won, and its sister company, Kia Motors, rose 2.71 percent to 41,650 won.

Liquor makers were buoyed by the government's plan to change the tax scheme on beer to address imbalances in taxes between imported and domestic beer. HiteJinro, a local beer and soju maker, jumped 4.14 percent to 21,400 won on hope of rising beer sales.

The South Korean won closed at 1,178.6 won against the U.S. dollar, up 4.2 won from Tuesday's close, on speculation that the local currency's recent decline has been excessive and may gain ground against the greenback on simmering signs of rate cuts in the U.S.


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