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Despite US-China conflict fears, Kospi rises back past 2,000-mark

A sign at the Korea Exchange shows the Tuesday’s closing prices of two major stock indexes. (KRX)
A sign at the Korea Exchange shows the Tuesday’s closing prices of two major stock indexes. (KRX)

Amid fears of an escalation in conflict between the US and China, South Korean shares extended gains for two consecutive sessions, with the main bourse Kospi reaching 2,029.78 points at Tuesday’s close, the highest in 12 weeks.

With expectations rising for an economic recovery, the Kospi index got off to a solid start at 2,001 -- up 6.40 points, or 0.32 percent -- from the previous session’s close. The main bourse continued to move upward and reached 2,022.95 in late morning trading. It was the first time that the index crossed the 2,020-point mark since March 6, when it closed at 2,040.22.

Foreign and institutional investors drove the index as they scooped some 9.5 billion won ($7.69 million) and 343 billion, respectively. Retail investors began trading by buying local stocks, but they suddenly turned to net sellers, offloading some 481.8 billion won.

The tech-heavy Kosdaq also rose 9.22 points, or 1.28 percent, to close at 729.11. It began at 723.28 and showed a strong performance throughout the day as retail investors turned to net buyers to purchase shares worth some 69.8 billion won.

While the US stock market was closed Monday (local time) for the Memorial Day holiday, market watchers attributed the rise in local indexes to European equities’ rally. The markets rose sharply as major global economies are rolling back their lockdowns and German business sentiment survey fueled optimism.

Germany Ifo Business Climate Index in May came in at 79.5 points from a revised 74.2 points a month ago. Citing the better-than-expected figure, Germany’s DAX jumped 2.87 percent. France’s CAC 40 and Euro Stoxx 50 gained 2.15 percent and 2.27 percent, respectively, at the closing bell.

“Investor sentiment was boosted by European markets’ sharp rises and some major nations’ COVID-19 shutdown easing,” said Seo Sang-young, an analyst at Kiwoom Securities. “The World Health Organization earlier warned of a potential second wave of COVID-19, but the effect was limited.”

Most large caps were in positive terrain.

Market bellwether Samsung Electronics advanced 0.82 percent to 49,250 won, while No. 2 chipmaker SK hynix added 0.61 percent to 81,900 won.

Chemical giant LG Chem and Samsung SDI soared 6.29 percent and 11.49 percent to 414,000 won and 388,000 won, respectively, at the closing.

Naver, the top internet portal operator, slipped 0.83 percent to 239,000 won, while leading game company NC Soft lost 1.35 percent to 801,000 won.

Meanwhile, the local currency closed at 1,234.30 won per dollar, up 9.90 won from the previous session’s close. Amid the escalating political tensions between the US and China over imposing the national security law in Hong Kong, the Chinese currency was traded at 7.1409 yuan per dollar.

By Jie Ye-eun (