[THE INVESTOR] South Korea’s benchmark stock index hit a near two-year high in morning trade on March 16, while the local currency rose to a two-week intraday high, following the US interest rate hike overnight.
The Korea Composite Stock Price Index surged 2,155 points soon after trade began. It was the highest point since April 2015 when it hit 2,156.24 points.
The Kospi closed up 0.08 percent to 2,150.08 points on March 16, while the tech-heavy Kosdaq rose 0.85 percent to 613.88 points.
The US Federal Reserve hiked policy interest rates by 25 basis points to a range of 0.75 to 1 percent in a second rate hike in three months. Federal Reserve Board Chair Janet Yellen hinted at a more gradual pace of monetary tightening this year than many had originally expected.
“As Yellen indicated a gradual interest hike and showed confidence in the economy, some of the market concerns were dispelled,” said Suh Bo-ik, an analyst with Yujin Investment & Securities Co.
Foreign investors, which account for more than 30 percent of South Korea’s stock market, remained net-buyers for nine consecutive days until March 16.
Institutional investors also were net-buyers while individual traders net-sold on profit-taking.
In addition to the interest hikes, the country’s stock market was boosted as some uncertainty has been cleared after President Park Guen-hye was impeached last week. Listed companies had logged record-high net profits in 2016.
The combined net profits of 1,901 listed firms on the main bourse Kospi and Kosdaq were estimated to be 107 trillion won ($93 billion) and their combined operating profits at 158 trillion won, according to a report by securities firm Mirae Asset Daewoo.
Meanwhile, the local currency began trading at 1,130.0 won against the US dollar, down 13.6 won from the previous session’s close.
The Korean won was quoted at 1,132 won against the greenback, down 15 won from the previous session, at close on March 16.
“Despite the Fed interest hike, the Fed’s stance was less hawkish than expected, weakening the US dollar.” Jeon Seung-ji, a foreign exchange analyst at Samsung Futures wrote in a report on March 16.
By Park Ga-young/The Korea Herald (email@example.com)