Seoul: South Korean stocks rose for a sixth consecutive session to a yearly high Tuesday, led by tech gains, on expectations for the government's market-friendly tax reform measures and the Federal Reserve's interest rate cuts. The local currency rose against the U.S. dollar. The benchmark Korea Composite Stock Price Index (KOSPI) added 40.46 points, or 1.26 percent, to close at 3,260.05, marking its sixth consecutive gain.
According to Yonhap News Agency, it was the highest level this year, surpassing the previous record set on July 30, when the index finished at 3,254.47. Trade volume was moderate at 419.02 million shares worth 10.33 trillion won (US$7.44 billion), with winners beating losers 587 to 289. Foreign and institutional investors bought a net 660.08 billion won and 304.54 billion won worth of shares, respectively, while retail investors sold a net 1.04 trillion won.
The index opened slightly higher, tracking overnight gains on Wall Street, and extended gains further. U.S. shares rallied on Monday, as a weaker-than-expected August jobs report reinforced expectations that the Fed would start reducing rates soon. The Dow Jones Industrial Average rose 0.25 percent, and the tech-heavy Nasdaq composite gained 0.45 percent. The S and P 500 index went up 0.21 percent.
"Recession fears that emerged after the U.S. employment data were somewhat eased, leading to an upturn in the KOSPI and other Asian stock markets," Lee Jae-won, a researcher at Shinhan Investment, said. "The U.S.' rate cuts have become more of a certainty, and expectations of a policy reversal regarding tax reforms are also contributing to the index's upward momentum."
On Monday, Finance Minister Koo Yun-cheol hinted at the possibility of revising the government's earlier proposal on the criteria for major shareholders subject to capital gains tax on stock transactions. The finance ministry had previously proposed lowering the threshold for capital gains tax on stock holdings from 5 billion won to 1 billion won, a move that has drawn criticism from investors.
Tech and chemical shares led the overall market advance. Market bellwether Samsung Electronics rose 2.0 percent to 71,500 won, and chip giant SK hynix surged 3.97 percent to 288,000 won. Major battery maker LG Energy Solution added 1.02 percent to 347,000 won, and leading chemical firm LG Chem spiked 6.35 percent to 293,000 won.
Top automaker Hyundai Motor added 0.23 percent to 219,000 won, and its sister Kia grew 0.57 percent to 105,500 won. Nuclear power plant manufacturer Doosan Enerbility climbed 2.13 percent to 62,200 won, and top financial firm KB Financial jumped 3.0 percent to 109,900 won. Leading steelmaker POSCO Holdings went up 1.61 percent to 284,000 won.
Bio shares ended mixed. Leading pharmaceutical firm Samsung Biologics advanced 0.92 percent to 1.1 million won, while Celltrion shed 0.29 percent to 169,500 won. Leading shipbuilder HD Hyundai Heavy decreased 1.37 percent to 504,000 won, and Hanwha Ocean dipped 0.81 percent to 110,000 won. Defense giant Hanwha Aerospace lost 0.63 percent to 945,000 won.
The local currency was quoted at 1,387.9 won against the greenback at 3:30 p.m., up 2.7 won from the previous session. Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 2.3 basis points to 2.425 percent, while the return on the benchmark five-year government bonds declined 2.6 basis points to 2.582 percent.