Seoul shares up

Seoul shares rose on Thursday after volatile trade, with gains led by banks after the government loosened capital requirements, while key exporters including Samsung Elec also rallied. The Korea Composite Stock Price Index (KOSPI) ended up 2.21 percent to 1,392.17 points after falling as much as 1.25 percent.
The index snapped five consecutive losing sessions during which it had shed 5 percent. Banks led gains, rallying after news South Korea revised down its capital ratio guideline for banks to a maximum 10 percent from 12 percent. "The move boosted sentiment towards banks, as it lessens pressure to keep certain level of capital," said Y.S. Rhoo, a market analyst at Hyundai Securities.
Merger and acquisition expectations were also driving banking issues higher, according to analysts. "There are alot of expectations for major M&A and restructuring in the banking sector right now that are sending banking issues higher," said Park Jung-hyun, an analyst at Hanwha Securities.
The most talked-about scenarios are KB Financial Group tying up with KEB, and Korea Development Bank with Hana Financial, Park said. Shares in KEB jumped 9.09 percent after rising as much as 12 percent earlier, and KB Financial fell 2.92 percent.
KB Financial spokesman Choi In-seok said the talk of its interest in KEB was groundless, while KEB also said it was unaware of any such move. Hana Financial ended up 6.79 percent. Key tech and auto exporters also fuelled gains. "Key blue chip exporters rose ahead of April industrial output data due out tomorrow, which is expected to be quite solid," said Rhoo at Hyundai Securities.
Samsung Electronics, the world's No 1 memory ship maker, advanced 4.49 percent and Hyundai Motor, South Korea's top automaker, rose 5.77 percent. "Carmakers' May sales are said to be strong. GM's imminent bankruptcy, while negative in the short-term, will also offer South Korean automakers opportunities to increase their market share in the longer-term," said Kim Yong-su, an analyst at SK Securities.
LG Electronics, the world's No 3 handset maker, ended up 5.75 percent. "LG Elec's handset shipments are estimated to be strong, and its household appliances unit is also doing well. We think the company's second quarter earnings will come out better than expected," said Kim Jang-won, an analyst at IBK Securities. Shipping companies also advanced after the Baltic Dry Index, which tracks costs of shipping key commodities, jumped 7.55 percent.
The index has risen 116 percent since early April. Shares in Hanjin Shipping gained 7.26 percent and STX Pan Ocean rallied 11.02 percent. Foreign investors bought a net 235.5 billion won worth of shares, while institutions purchased a net 192.5 billion won worth Retail investors offloaded a net 390 million won. Advancers led decliners 465 to 351, with 66 unchanged.
Trading volume stood at 610 million shares worth 6.9 trillion won compared with 768 million shares worth 8 trillion won on Wednesday. The KOSPI 200 June futures index ended 3.45 points higher at 177.30, and the KOSPI 200 spot index gained 4.44 points to 178.19. The junior Kosdaq market declined 0.61 percent to end at 521.11 points.