Seoul shares rose on Thursday with gains fueled by banks including Shinhan Financial Group, while technology issues and automakers such as Hyundai Motor extended their rally. The Korea Composite Stock Price Index (KOSPI) finished up 1.97 percent at 1,576.39 points.
"Sentiment improved quite significantly in the afternoon as Chinese markets picked up after prolonged losses," said Lee Young, a market analyst at IBK Securities, adding investors would continue to market Chinese shares. The main Shanghai composite index was up 4.45 percent as of 0650 GMT. US futures were also up, with S&P 500 index futures rising 0.4 percent and Nasdaq futures gaining 0.36 percent.
The KOSPI may test its one-year high of 1,594.46 points hit last week, with its 14-day Relative Strength Index standing at 61, suggesting it is not yet overbought. Institutions fueled markets as buyers of a net 229 billion won ($183.1 million) worth of stocks.
Steel issues including POSCO advanced after recent losses, with the world's No 6 steelmaker rising 2.39 percent and Hyundai Steel gaining 2.81 percent. Banking issues also rose, with Shinhan Financial Group jumping 5.41 percent and KB Financial Group spiking 6.11 percent a day before it sets the final price for a 1 trillion won rights offering.
Hana Financial Group also advanced 4.18 percent after Citigroup lifted its target price and earnings estimates for 2010 and 2011 on the group, citing its solid earnings from a brokerage unit and other non-banking operations. The rally also followed news that major South Korean banks had signed an agreement to launch a bad bank expected to buy 5 trillion won ($4 billion) worth of toxic assets.
"That was probably an added positive for banking shares, but broader financial shares were isolated from the market's recent rally, and are belatedly picking up," said Lee Kyoung-su, a market analyst at Taurus Investment & Securities. Insurer Samsung Fire & Marine rose 5.37 percent and Hyundai Marine & Fire gained 4.62 percent.
Technology issues including Samsung Electronics and Hynix Semiconductor also managed to eke out gains despite big rises in the previous session. Credit Suisse raised its target price on Samsung Electronics by 16 percent to 860,000 won and lifted its earnings estimate for the world's No 1 memory chipmaker in a note on Thursday.
Samsung Electronics ended up 0.27 percent at 740,000 won while Hynix Semiconductor advanced 1.01 percent. Automakers also rallied, as Hyundai Motor went up 4.5 percent and Kia Motors up 2.99 percent. But shares in airlines and tour issues declined amid a surge in negative H1N1 influenza news and as crude futures continued to rise, prompting fuel cost worries.
Korean Air Line, South Korea's top air carrier, lost 1.29 percent and Hana Tour declined 0.86 percent. A more than 3 percent fall in the Baltic Dry Index, which tracks the cost of shipping key commodities, pressured shipbuilders, with Hyundai Heavy Industries sinking 1.3 percent and Samsung Heavy Industries declining 3.64 percent. Foreign investors sold a net 156.6 percent won worth of stocks and retail investors were sellers of a net 31.8 billion won worth of stocks.
Advancers led decliners 544 to 264, with 74 counters ending flat. A total of 447.7 million shares worth 6.1 trillion won changed hands, compared with 512.3 million shares worth 6.67 trillion won traded on Wednesday. The KOSPI 200 September futures index rose 4.20 points to 205.50, while the KOSPI 200 spot index went up 4.14 points to 205.22. The junior Kosdaq market advanced 1.29 percent to 516.77 points.
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