Seoul Stocks Rise After US Rate Cut
By Yoon Ja-young
Staff Reporter
After choppy trading, Seoul stocks closed firmer as late bargain-hunting more than offset earlier losses triggered by overnight Wall Street falls.
The benchmark KOSPI closed at 1927.45 Wednesday, gaining 2.38 points, or 0.12 percent. The junior tech-loaded KOSDAQ fell 4.81 points, or 0.66 percent, to close at 729.52 points.
Most other Asian stock markets, meanwhile, faltered on weak U.S. stocks, which plunged over 2 percent hit by the U.S. Federal Reserve's smaller-than-expected 0.25 percentage points cut in its key rate. Adding to the downward pressure was the analysis that a further interest rate cut is not likely. The Fed's statement that three rate cuts ordered thus far should help promote moderate growth over time also disappointed investors who were expecting further cuts.
The KOSPI fell to as low as 1887.23 points, but it recouped earlier losses and managed to close in positive territory with individual and institutional investors seeing merits in low prices. The net buying of program trading also contributed.
Analysts said the rate cut had already been reflected on the stock market, and estimated the negative effect to be short-lived. The pressure for further interest cuts will grow as the U.S. economy slows down, according to CJ Investment & Securities. Standard & Poor's also expected a further rate cut next January.
``Investors realized that the overnight plunge of the New York Stock Exchange was excessive,'' said Kim Sung-bong, an analyst at Samsung Securities. He said there is less probability of the worst-case scenario for the credit crunch following the interest rate cut.
KT rose 1.63 percent to 56,100 won thanks to consolidation talks with KTF, and SK Telecom rose 2.6 percent. Samsung Electronics, meanwhile, closed down 0.8 percent at 598,000 won.