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Optimism over summit buoys Seoul stocks

June 12,2018
Korea’s main bourse ended higher Monday as the upcoming summit between the United States and North Korea raised hopes for eased tensions on the Korean Peninsula and greater chances for inter-Korean economic projects. The Korean won appreciated against the U.S. dollar.

The benchmark Kospi added 18.57 points, or 0.76 percent, to finish at 2,470.15. Trade volume was moderate at 6.81 trillion won ($6.34 billion).

Institutions drove the index upward by scooping up a net 282.1 billion won in local shares, while foreigners dumped a net 9.8 billion won and retail investors offloaded a net 258.6 billion won worth.

“Despite uncertainties, the planned summit seems to serve as a positive source for the market at least for now, as investors expect such peace events to have a positive impact on the Korean market both in short and long-term perspectives,” said Noh Dong-gil, an expert at Shinhan Securities.

On Tuesday, U.S. President Donald Trump and North Korean leader Kim Jong-un will hold a historic summit in Singapore for a showdown on the North’s nuclear ambitions.

Shares of infrastructure-related companies, such as construction, steelmakers and electric firms, had a bullish day as they are expected to benefit from a thaw in inter-Korean ties and the subsequent increased chances for joint development projects.

Top steelmaker Posco rose 3.33 percent to 372,000 won, and its smaller rival Hyundai Steel advanced 2.63 percent to 62,400 won.

Train manufacturer Hyundai Rotem surged 4.92 percent to 38,400 won, Hyundai Construction jumped 7.59 percent to 72,300 won and Hyundai Cement spiked 29.86 percent to 80,900 won. State utility firm Korea Electric Power Corporation increased 3.08 percent to 35,100 won.

Key semiconductor makers also finished higher on the back of positive forecasts for second-quarter earnings. Top cap Samsung Electronics moved up 0.50 percent to 49,900 won, and SK Hynix rose 0.90 percent to 89,200 won.

The secondary Kosdaq declined 1.93 points, or 0.22 percent, to 876.55. The tech-heavy index fell for two consecutive sessions, dragged down by weak large-cap semiconductor and IT shares.

The Korean currency closed at 1,075.20 won against the U.S. dollar, down 0.7 won from the previous session’s close.

Bond prices, which move inversely to yields, ended lower. The yield on three-year bonds added 3.4 basis points to 2.22 percent, and the return on 10-year government bonds gained 1.8 basis points to 2.73 percent.

BY KIM EUN-JIN, YONHAP [kim.eunjin1@joongang.co.kr]