SEOUL, July 9 (Reuters) – Seoul shares rose on Friday as investors welcomed the central bank’s surprise rate hike decision as a sign the economy was making a firm recovery, sending exporters and financials including Hana Financial (086790.KS) up.
The Korea Composite Stock Price Index (KOSPI) finished 1.43 percent higher at 1,723.01 points, just 2 percent away from its earlier 2010 high of 1,757.76 points.
“The rate hike came a bit earlier than expected, but investors took it as a sign the domestic economy was doing very solidly. Foreign investors’ buying confirmed that positive view,” said Kim June-kie, a market analyst at SK Securities.
“Optimistic quarterly earnings expectations are helping market make further upward moves,” Kim added.
Financials bounced as the rate hike strengthened hopes banks may see higher net interest rate margins, analysts said.
“Insurers will benefit as they can buy bonds more cheaply, while banks’ net interest margin could be helped through levying higher interest rates on lending,” said Shim Kyu-sun, an analyst at HI Investment & Securities.
Shares in Hana Financial Group rose 5.5 percent and Woori Finance Holdings (053000.KS) gained 4.14 percent.
Samsung Life Insurance (032830.KS) rose 1.43 percent and Korea Life (088350.KS) climbed 1.47 percent.
Key blue chips also outperformed as expectations for the impending second quarter earnings season mounted.
Shares in Samsung Electronics (005930.KS), the world’s No.1 memory chip maker, gained 2.71 percent and Hyundai Motor (005380.KS), South Korea’s No.1 automaker, rose 3.35 percent.
Tour and airline issues also outperformed as the won KRW= extended gains after the rate hike news. A stronger won could help boost demand for overseas travel and reduce the costs of imported jet fuel.
Shares in Korean Air Line (003490.KS) advanced 1.38 percent and major tour agency Hana Tour (039130.KQ) ended up 2.99 percent.
CCTV maker Samsung Techwin (012450.KS) jumped 5.5 percent as it was widely expected to post strong quarterly figures.
“Samsung Techwin’s margins improvement has been definitely strong, but I think shares have been a bit overbought,” said Chun Seong-hoon, an analyst at Eugene Investment & Securities, adding that shares were trading at about 25 times 2010 forecast earnings.