Seoul: South Korean stocks jumped more than 1 percent Monday after Federal Reserve Chair Jerome Powell hinted at a possible rate cut during the U.S. bank's meeting next month. The local currency sharply gained against the U.S. dollar.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) added 41.13 points, or 1.3 percent, to close at 3,209.86, extending its winning streak to a third day. Trade volume was light at 217.3 million shares worth 7.91 trillion won (US$5.71 billion), with gainers beating losers 598 to 271.
Foreign investors purchased a net 26.7 billion won, while individual investors sold off a net 386.9 billion won. Institutional investors bought a net 251.9 billion won. Last week, Powell hinted at a possible cut at the Federal Open Market Committee meeting in September, noting, "With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance."
Investors were also keen on the outcome of the summit between Seoul and Washington slated for Monday (U.S. time), with South Korea's business leaders widely anticipated to announce investment pledges on the sidelines of the meeting. "Reflecting hopes for industrial cooperation (between South Korea and the United States), nuclear energy, chip, and pharmaceutical shares gained ground," Lee Kyoung-min, an analyst at Daishin Securities, commented.
Top tech companies saw gains, with Samsung Electronics rising 0.14 percent to 71,500 won, and SK hynix surging 3.39 percent to 259,500 won. Battery manufacturers were major winners, with LG Energy Solution jumping 3.4 percent to 380,000 won and Samsung SDI climbing 2.55 percent to 221,500 won. Nuclear power plant builder Doosan Enerbility soared 5.95 percent to 65,900 won.
The pharmaceutical sector also saw gains, with Celltrion rising 0.29 percent to 174,300 won and Hanmi Pharm adding 2.47 percent to 290,000 won. Financial firms traded bullishly amid the rate cut hope, with KB Financial adding 1.75 percent to 110,300 won and Hana Financial gaining 0.36 percent to 82,600 won.
The local currency was quoted at 1,384.7 won against the greenback at 3:30 p.m., up 8.5 won from the previous session. Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys dropped 2.2 basis points to 2.434 percent, and the return on benchmark five-year government bonds decreased 2.2 basis points to 2.602 percent.