Seoul shares climbed to a seven-week closing high on Monday, posting sharp gains on the back of stronger-than-expected US jobs data and resuscitated hopes of fresh easing from the European Central Bank. The Korea Composite Stock Price Index (KOSPI) rose 2.01 percent to close at 1,885.88 points, its highest level since June 21 and settling well above its 60-day moving average of 1,841 points.
Investors positively re-evaluated the ECB's statement after its policy meeting on Thursday which hinted at upcoming steps to contain surging borrowing costs in Spain, overcoming last week's initial disappointment over a lack of immediate action. "The ECB still faces legal challenges such as the pending decision of the German constitutional court over the ESM, but further action is still only seen as a question of when despite the timeframe being pushed back to September at the earliest rather than now," said Lee Jae-hoon, an analyst at Mirae Asset Securities.
Sentiment was also lifted after US nonfarm payrolls climbed the most in five months, although a simultaneous rise in the jobless rate preserved hopes of further monetary stimulus from the Federal Reserve as soon as September. "The ECB and the Fed didn't fire their big guns, but strong hints have been given and enough pressure still exists for further easing to keep markets buoyant," said Lee.
Growth-sensitive stocks outperformed, led by builders with GS Construction soaring 6.3 percent while Hyundai Engineering & Construction gained 4.1 percent. Bluechip tech exporters underpinned the market, with US linked Samsung Electronics surging 4.4 percent while SK Hynix rose 3.8 percent. The main board's 200-share benchmark was lifted 2.3 percent, with 144 of its components ending in positive territory, underscoring the broad rally in large-cap index heavyweights.
Foreigner investors were net buyers of South Korean stocks for the sixth session out of the last seven, with last Friday's net selling following a brief dip in global risk appetite. Offshore players bought a net 138.1 billion won ($121.7 million) worth of shares on Monday following a week where the local market enjoyed a wave of over 1.2 trillion won in net foreign inflow. Shares in STX Group affiliates rose, with STX Offshore & Shipbuilding up 4 percent after Atinum Investment Co said in a regulatory filing that it was mulling a bid for unlisted subsidiary STX Energy Co through a private equity fund.
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