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Kospi breaks record, again

South Korea’s main stock market index Kospi closed above 2,500 on Monday for the first time in history.

The Kospi finished the day at 2,501.93 Monday, up 0.21 percent from Friday, extending the record run for the second straight day. The index recorded an all-time intraday high of 2,513.87 in early morning trade.

(The Korea Exchange)
(The Korea Exchange)
Samsung Electronics and chipmaker SK hynix, both market bellwethers, jumped 1.8 percent.

Both individual investors and foreign investors net purchased stocks worth over 250 billion won ($222.2 million).

The market operator Korea Exchange underscored the unprecedentedly high closing mark came in spite of a series of geopolitical risks surrounding North Korea, China and the United States, as well as US Federal Reserve’s tapering, in a release immediately after market’s close.

The South Korean won strengthened by 5.9 won against the greenback as of Monday’s close. The currency exchange rate came to 1,124.6 won, from 1,130.5 won in the previous session’s close.

Analysts noted the strong won came in line with weak dollar on US President Donald Trump’s reported decision to nominate former investment banker and dovish US Fed board member Jerome Powell as US Federal Reserve chair, Trump is scheduled to nominate a replacement of the incumbent Fed Chair Janet Yellen Friday.

US Federal Reserve Governor Jerome Powell (AP-Yonhap)
US Federal Reserve Governor Jerome Powell (AP-Yonhap)
Riding the weak dollar trend, the won-dollar currency exchange rate might fall further depending on the volume of local businesses’ dollar sell-off, but the currency market will eventually see a strong exchange rate floor due to “uncertainties carried by the Trump decision,” wrote Park Sung-woo, an analyst at NH Investment & Securities.

Meanwhile, treasury yields of government bonds were mixed Monday, as the short-term bonds strengthened and the long-term bonds weakened in close compared to Friday. Returns of three-year sovereign bonds dipped 27 basis points to 2.137 percent, while those of 30-year government bonds rose 19 basis points to 2.420 percent.

In the late morning, both short-term and long-term bonds mostly strengthened, also on news reports that Trump planned to pick a dovish new Fed chair.

A drop in treasury yields translates into a rise in bond prices.

Regardless of whether the US Federal Open Market Committee decides to keep the key rate steady or not on Wednesday, Trump’s nomination of a new Fed chair would “widen bond market volatility,” wrote Lee Hwa-jin, a credit analyst at Kiwoom Securities.

By Son Ji-hyoung 
(consnow@heraldcorp.com)
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