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Seoul shares gain as China lockdown woes ease; Fed rate views at focus

Nov. 29, 2022 - 16:17 By Yonhap
An electronic board showing the Korea Composite Stock Price Index at a dealing room of the Hana Bank headquarters in Seoul on Tuesday. (Yonhap)

South Korean stocks snapped a two-session losing streak to close higher Tuesday, as worries about China's strict COVID-19 lockdown policy eased with growing expectations for an eventual reopening. The local currency rose sharply against the US dollar.

The benchmark Korea Composite Stock Price Index climbed 25.12 points, or 1.04 percent, to close at 2,433.39. Trading volume was moderate at 522.6 million shares worth 6.35 trillion won ($4.79 billion) with advancing issues outstripping decliners 659 to 196.

"The Chinese government is already taking a policy approach toward easing the COVID-19 restrictions, although the level of intensity may have differed," Kiwoom Securities Co. analyst Han Ji-young said.

"Given that Chinese state media have mentioned the possibility of accelerating the push to ease the virus curbs, we expect the control measures to have limited impact on the local stock markets," Han said.

The civil unrest in China, sparked by protests over prolonged COVID-19 lockdowns, has stoked fears of global supply disruptions. The news of reduced shipments at a major iPhone production site run by Foxconn added to the concerns, sending Apple Inc.'s shares sinking in the New York bourse Friday.

The stock markets in mainland China and Hong Kong rebounded Tuesday on optimism over Beijing's COVID-19 curbs.

Investors also have their eyes on what US Federal Reserve Chair Jerome Powell will say later this week about the Fed's next steps in the monetary tightening after four successive rate hikes by 0.75 basis point since June.

Hard-line comments from US Federal Reserve officials pointing to more interest rate hikes through next year sent Wall Street ending the session lower Monday.

Federal Reserve Bank of St. Louis President James Bullard, one of the most hawkish Fed officials, said markets seem to be underestimating the possibility of more aggressive rate hikes. New York Fed chief John Williams said the policymakers have more work to do to fight the inflation.

In Seoul, most major stocks finished in the green, led by tech and auto blue chips. Market behemoth Samsung Electronics gained 0.83 percent to 60,600 won, with Kia, the smaller affiliate of Hyundai Motor advancing 2.9 percent to 67,300 won.

Top battery maker LG Energy Solution rose 0.9 percent to 567,000 won.

Steel giant POSCO Holdings slid 0.2 percent to 293,000 won, and smelting company Korea Zinc fell 2 percent to 633,000 won.

Shares in Korea Air Lines and Asiana Airlines, South Korea's two largest air carriers, jumped 2.65 percent to 25,200 won and 11.54 percent to 13,050 won, respectively, after receiving a positive signal from British authorities in the approval process for their merger.

The Korean won ended at 1,326.60 won against the US dollar, up 13.6 won from Monday's close.