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South Korea Stock Market May Halt Losing Streak

4/1/2012 7:31 PM ET

The South Korea stock market gave up less than a point on Friday - but that was enough to extend its losing streak to three sessions, costing it more than 25 points or 1.25 percent in that span. The KOSPI finished just below the 2,015-point plateau, and now investors figure to go hunting for bargains when the market kicks off trade on Monday.

The global forecast for the Asian markets is upbeat after Eurozone finance ministers decided to raise the combined size of the region's bailout funds to prevent the possible spillover of the debt crisis in some member states - although mixed economic data could limit the upside. The European markets finished higher and the U.S. bourses were mixed - and the Asian markets are tipped to split the difference.

The KOSPI finished flat on Friday as losses from the shipbuilders and technology stocks were offset by support from the oil companies.

For the day, the index eased 0.37 points or 0.02 percent to finish at 2,014.04 after trading between 2,002.61 and 2,018.09. Volume was 445 million shares worth 5.25 trillion won. There were 509 gainers and 317 decliners.

Among the actives, Samsung Electronics lost 0.39 percent, while Hynix Semiconductor plunged 4.1 percent, Hyundai Heavy Industries shed 0.46 percent, Daewoo Shipbuilding and Marine Engineering fell 3.04 percent, Hyundai Motor dropped 1.48 percent, Kia Motors retreated 1.28 percent, LG Chem jumped 2.21 percent and SK Innovation climbed 1.85 percent.

The lead from Wall Street suggests mild upside as stocks were lackluster on Friday, with traders expressing uncertainty about the outlook for the markets following the strong first quarter. The choppy trading came as traders seemed reluctant to make any significant moves on the heels of a mixed batch of U.S. economic data.

The Commerce Department reported that personal spending rose 0.8 percent in February following an upwardly revised 0.4 percent increase in January. Economists had expected an increase of 0.6 percent following the 0.2 percent growth originally reported for the previous month. Meanwhile, personal income edged up 0.2 percent in February, matching the downwardly revised increase in January. Personal income had been expected to increase by 0.4 percent.

A separate report from Reuters and the University of Michigan showed that the consumer sentiment index for March was upwardly revised to a reading of 76.2 from the preliminary reading of 74.3. With the upward revision, the March reading is up from 75.3 in February and above forecasts of 75.0.

On the other hand, the Institute for Supply Management - Chicago reported that its business barometer fell to 62.2 in March from 64.0 in February, although a reading above 50 still indicates an increase in business activity. Economists had expected the index to show a more modest drop to a reading of 63.0.

Among individual stocks, Research In Motion (RIMM) spiked 7.1 percent even though the BlackBerry maker reported weaker than expected fourth quarter results. The company also said it expects continued pressure on revenue and earnings throughout fiscal 2013.

The major U.S. averages were mixed on Friday, with the tech-heavy NASDAQ edging down 3.79 points or 0.1 percent to finish at 3,091.57. The Dow rose 66.22 points or 0.5 percent to end at 13,212.04 and the S&P 500 climbed 5.19 points or 0.4 percent to close at 1,408.47. Despite the mixed performance, the major averages all moved sharply higher for the first quarter. The Dow advanced by 8.1 percent for the quarter, while the NASDAQ and the S&P 500 surged up by 18.7 percent and 12 percent, respectively.

In economic news, South Korea's gross domestic product was up a revised 0.3 percent in the fourth quarter of 2011 compared to the previous three months, the Bank of Korea said on Friday. That was slightly lower than the 0.4 percent gain reported in January's preliminary reading, and it follows the 0.8 percent gain in the third quarter.

On a yearly basis, GDP was up 3.3 percent - again slightly lower than the 3.4 percent increase originally reported. GDP was up 3.5 percent in the third quarter. For all of 2011, GDP was unrevised at 3.6 percent.

Also, industrial output in South Korea increased a seasonally adjusted 0.8 percent in February compared to January, Statistics Korea reported on Friday. The government also revised its January figure to show a 3.2 percent increase in industrial production.

For the full year, industrial production was up 14.4 percent, following a revised 2.1 percent on-year decline the month before. The government's Leading Indicator increased in February to 99.8 from 99.3 in January.

Finally, South Korea's central bank reduced the ratio of U.S. dollar assets in its reserves in 2011, in order to diversify the reserves and cope with volatility. The Bank of Korea on Friday said in its annual report that dollar holdings fell to 60.5 percent of total foreign-exchange reserves at the end of 2011 from 63.7 percent a year ago.

The central bank, which holds the world's seventh-biggest foreign reserves, raised their holdings of foreign government bonds to 36.8 percent of its foreign exchange reserves from 35.8 percent in the prior year.

by RTT Staff Writer

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