South Korean shares rose on Friday to a record, surpassing last week's peak, as new additions to the MSCI indexes such as Doosan Heavy rallied, although broader gains were tempered by some disappointing earnings results.
Some exporters such as Samsung Electronics Co Ltd also advanced after data showing signs of strength in the US economy led to expectations for increased sales to South Korea's second-biggest export market. After the market's close, Shinhan Financial Group said quarterly net profit doubled to a record. But shares had fallen 1.88 percent to 52,300 won during trading hours, in line with a decline in banking shares on expectations that earnings may have peaked in the last quarter.
"The MSCI additions have sparked a rally because global investors that track the MSCI index will have to add the shares," said Cho Seong-joon, an analyst at Meritz Securities. The benchmark Korea Composite Stock Price Index (KOSPI) rose 0.51 percent to end at both an intraday and closing record of 1,567.74 points.
That surpassed a prior peak of 1,565.03 points hit on April 26, during a month in which the KOSPI surged 6.2 percent, bolstered by stronger global markets and strong foreign buying.
Seoul shares rose 1.63 percent for the week, marking its ninth consecutive weekly gain, the longest streak since November 2005 to January 2006. Companies that have recently posted better-than-expected earnings such as SK Corp had been among the leading gainers this week.
Although analysts are for the most part expecting further gains on the back of a global market rally and expectations for an improving domestic economy and corporate earnings, warnings of a technical correction have also grown more pronounced.
"In the long run, gains will continue. In the short term, we are facing some technical-related problems," said Cho. The KOSPI's relative strength index rose on Friday to 72.9 points, breaking above the 70-point level at which a share or index tends to be seen as technically overbought.
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