Seoul shares end firm

Seoul shares ended firm on Tuesday as upward momentum on positive earnings expectations continued, with robust gains by key tech and auto blue chips, including LG Electronics and Hyundai Motor. The Korea Composite Stock Price Index (KOSPI) finished up 0.37 percent at 1,434.20 points, merely 1.5 point away from the year's earlier closing high reached in late May.
"Earnings momentum kicked off by Samsung Electronics' forecasts are continuing to fuel markets today, lifting shares in its peers as well," said Lim Nara, a market analyst at Hanwha Securities. "However, in order for markets to make a more meaningful rebound the markets need support from other sectors as well. As shares have neared their earlier year-highs, they will likely be rangebound for sometime before the earnings season kicks off," Lim added.
Samsung Electronics, the largest counter on the main KOSPI accounting for about 10 percent of its market cap, climbed 2.52 percent to 650,000 won, hitting a 52-week high. LG Electronics, the world's No 3 handset maker, jumped 5.28 percent to 129,500 won, also hitting the highest level in 52 weeks.
"LG Electronics is also riding on brewing earnings hopes...investors who missed out on a chance to buy Samsung Electronics earlier are turning to LG Electronics shares as an alternative," said Steve Lee, an analyst at Goodmorning Shinhan Securities. The world's No 3 handset maker also said on Tuesday it planned to invest $100 million in Mexico in the next three years to expand its market presence and workforce there.
Automakers also rallied as investors' appetite towards Seoul key blue chip issues grew, sending shares in Hyundai Motor up 3.4 percent and Kia Motors up 2.96 percent. "Auto makers' domestic sales have been robust, and this will accordingly be reflected in their second quarter earnings," said Lee Sang-hyun, an analyst at Hana Daetoo Securities.
Meanwhile, Korea Exchange Bank (KEB) rose 1.91 percent after a local media report said South Korea's National Agricultural Co-operative Federation, known as Nonghyup, was considering purchasing the lender. But a spokesman for Nonghyup denied the report as untrue, saying it lacked the capacity for a bid, and shares gave up earlier gains of as much as 7.2 percent. "Nonghyup is said to have a lot of debt and bad assets on its balance sheet...which is why I think the report is preposterous.
Little synergy is expected between the two, and if Nonghyup does approach KEB, it would in fact be negative for the bank," said Hwang Huhn, an analyst at Woori Investment & Securities. Elsewhere, Cheil World-wide Inc jumped 5.26 percent on Tuesday as the Seoul-based advertising agency, a Samsung Group unit, was expected to post strong earnings for the April-June quarter.
"After a slow first quarter, Cheil's advertising sales seem to have turned around in June. The second-quarter operating profit will almost likely double the first-quarter figure," analyst Lee Heuijung at SK Securities said. "Samsung Electronics has been expanding marketing costs for its handset and TV products. Such spending will likely continue for the rest of the year, and Cheil will get a large chunk of Samsung Electronic's marketing costs," Lee added. Foreign investors bought a net 145.9 billion won worth of shares.
Institutions sold a net 95.8 billion won and retail investors sold a net 23.6 billion won. Decliners led advancers 398 to 396, with 96 unchanged. Trading volume stood at 446.3 million shares worth 4.9 trillion won, compared with 373 million shares worth 4.5 trillion won on Monday. The KOSPI 200 September futures index rose 0.50 points to 185.00, while the KOSPI 200 spot index advanced 0.61 points to end at 185.11. The junior Kosdaq market climbed 0.66 percent to 508.76 points.