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Stocks bounce after China promises stimulus

Feb 05,2020
Stocks snapped a three-day losing streak to rise by almost 2 percent on Tuesday, as foreigners purchased large-cap stocks on Chinese stimulus measures to offset fallout from the Wuhan coronavirus. The won rose sharply against the dollar.

The Kospi rose 39.02 points, or 1.84 percent, to 2,157.90, ending the selling streak for the past three days sparked by the rapid spread of the novel coronavirus.

China initiated stimulus measures to shore up growth, and the People’s Bank of China announced its plan to inject $21.7 billion into markets.

The Kospi plunged 5.7 percent last week.

“Expectations for a rate cut in China and Chinese economic stimulus packages improved investor sentiment,” Seo Sang-young, a researcher at Kiwoom Securities, said.

Still, investors will remain wary as global stocks are highly volatile due to the coronavirus outbreak that is continuing to spread across borders and is driving down demand in China, the world’s second-biggest economy after the United States.

Since the outbreak in the Chinese city of Wuhan late last year, the new coronavirus has killed at least 425 and infected more than 20,000 people in China as of Tuesday and reached over 24 countries, including the United States.

Korea has reported 16 confirmed coronavirus cases as of Tuesday.

Foreigners and individuals bought a combined 690.9 billion won ($582 million) worth of stocks, offsetting institutions’ net selling of stocks valued at 704.1 billion won.

Among gainers, Samsung Electronics rose 2.97 percent to 58,900 won, chipmaker SK hynix climbed 2.53 percent to 97,100 won, and carmaker Hyundai Motor gained 0.40 percent to 124,000 won.

Amorepacific climbed 3.14 percent to 197,000 won, and LG Household & Health Care rose 1.52 percent to 1,269,000 won.

Pharmaceutical company Celltrion rose 0.60 percent to 167,500 won, and another chemical company LG Chem rose 8.43 percent to 379,500 won.

Among losers, steelmaker Posco fell 0.23 percent to 214,000 won, and a tobacco company KT&G was down 1.93 percent to 91,600 won.

The won closed at 1,187.40 won to the dollar, down 7.60 won from the previous session’s close.

The secondary Kosdaq was up 14.39 points, or 2.22 percent, to close at 661.24.

Bond prices, which move inversely to yields, closed higher. The yield on three-year bonds rose 3.8 basis points to stand at 1.329 percent, and the benchmark 10-year government bond rose 2.3 basis points to 1.52 percent.

BY KIM YEON-AH, YONHAP [kim.yeonah@joongang.co.kr]