KOSPI, Won Surge on Swap Contract
By Kim Tae-gyu
Staff Reporter
Seoul bourses rose at a record pace Thursday, boosted by a $30 billion currency swap deal between Korea and the United States. The domestic currency also appreciated sharply.
The benchmark KOSPI surged 115.75 points, or 11.95 percent, to close at 1,084.72, thus renewing records for both the daily upside margin and rate. Previous highs were 93.2 points and 8.5 percent, respectively.
The junior Kosdaq also broke records by jumping 30.46 points, or 11.47 percent, to 296.05. The stock market moves caused the Korean won to soar 177 won to 1,250 won per dollar, the biggest single-day gain since Dec. 26, 1997. The local currency has risen 218.8 won over the past two trading sessions.
``One piece of good news single-handedly carried local financial markets. The currency swap deal is expected to positively affect the market in the foreseeable future,’’ said Lee Sun-yup, an analyst at Goodmorning Shinhan Securities.
``People now believe Korea will not face a meltdown similar to the Asian financial crisis 10 years ago. In this sense, the swap contract gives very strong momentum. I think both the KOSPI and the won-dollar exchange rate will meet at 1,200 soon,’’ he said.
The U.S. Federal Reserve announced Thursday that it would sign a swap arrangement with the Bank of Korea to provide $30 billion in exchange for the Korean won.
The temporary contract, which will expire next April, is expected to help boost investor confidence in the Korean economy.
Lee added that the Fed’s separate measure of cutting down its benchmark interest rate by 0.5 percentage points to 1 percent also spurred investment sentiment.
The KOSPI started on a strong note on the currency swap news and maintained a solid performance throughout the day across the board.
All 250 of the highest market-capitalization corporations saw their stock prices rise with the sole exception of Bookook Securities, which suffered a 3.17 percent decline.
Tech bellwether Samsung Electronics rocketed 13.05 percent to 537,000 won and leading carmaker Hyundai Motor jumped 14.7 percent to 63,200 won.
A total of 616.5 million shares changed hands worth 7.32 trillion won. Winners overwhelmed losers 839 to 55 with 375 reaching their daily limit up of 15 percent.
Steel maker POSCO added 14.85 percent to close at 352,000 won while top shipyard Hyundai Heavy Industries was up 14.96 percent at 157,500 won.