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Thursday August 23, 10:53 AMSeoul shares rally, but caution still entrenchedSEOUL, Aug 23 (Reuters) - Seoul shares rose 2.7 percent on Thursday, heading for a fourth day of gains on growing hope that the global economy will weather the recent woes in credit markets, though the optimism was not shared by all.Exporters such as LG.Philips LCd Co Ltd rose, while a recovery in some commodity prices bolstered firms dependent on strong trading volumes of raw materials such as steel maker POSCO . The KOSPI has now gained 10 percent in the past four sessions, recovering all of its 10.4 percent slump last week when investors were gripped by worries that a crisis originating from the U.S. subprime mortgage sector would derail economies around the world. Yet despite the strong buying -- with 652 shares gaining and only 126 going into the red -- analysts remained cautious. "This looks to me more like a technical rebound, and I expect markets to settle on a flat trading range," said Chung Kyun-sik, chief investment officer at Eastar Investment Advisors. "The U.S. mortgage crisis still has the potential to derail U.S. economic growth, which would have a knock-on effect on the global economy. It's a very serious matter, and it's not going to go away just because global markets rallied in the past several days," he added. The benchmark Korea Composite Stock Price Index (KOSPI) rose 2.74 percent to 1,807.58 points by 0233 GMT, after earlier hitting its highest intraday level since Aug. 14. The KOSPI is still 10 percent off a record 2,015.48 points hit on July 26, though the index is up 26 percent for the year. U.S. stocks rose overnight, with S&P 500 index futures jumping after the close when Bank of America Corp said it would invest $2 billion in preferred stock issued by mortgage lender Countrywide Financial Corp . The news further eased worries about credit markets, as it comes after several U.S. banks took the step of borrowing $2 billion from the Federal Reserve on Wednesday. [ID:nN22431734 At home, South Korea's top economic officials plan to brief President Roh Moo-hyun on Thursday about the local impact from the U.S. subprime sector, a government source told Reuters. [ID:nSEO240421] GENUINE TURNAROUND? Exporters were among the session's gainers on confidence the global economy will ride out the recent troubles in credit markets. Flat panel maker LG.Philips LCD rose 3.28 percent to 42,550 won. Shares in commodity-related stocks gained after the world's biggest miner BHP Billiton Ltd/Plc on Wednesday posted a jump in earnings and forecast big volume growth in petroleum, base metals, iron ore and stainless steel. [ID:nSYD116832] Steel maker POSCO surged 4.6 percent to 523,000 won, while oil refiner SK Energy Co advanced 4.03 percent to 129,000 won. Investors also regained their preference for sectors that are this year's top performers, with Hyundai Heavy Industries Co up 9.14 percent to 328,500 won. The world's biggest shipbuilder peaked at a record 403,500 won this year on July 11. Continued strong demand for commodities also helps shipbuilder shares as it can increase the number of vessel orders. Financial shares, among the most heavily hit during the recent market slump, regained their footing, after Fitch Ratings reiterated on Wednesday that South Korea has limited exposure to securities tied to the U.S. subprime mortgage sector. Shinhan Financial Group rose 3.05 percent to 57,400 won. ($1=939.5 Won) |
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