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Korea shares ends slightly higher on blue chips

SEOUL: South Korea's benchmark index closed slightly higher on Thursday as institutional selling limited gains led by a rebound in recently shunned blue chips, analysts said.

The Korea Composite Stock Price Index (KOSPI) closed up 3.69 points or 0.44 percent at 841.22.

"Blue chips, after being hit hard for days, recovered on aggressive buying from foreign investors," said Kim Jeong-hwan, a market strategist at LG Investment and Securities. Pohang Iron and Steel Co (POSCO) the world's biggest steel maker in terms of output, rose 3,500 won to 103,500.

State-run Korea Electric Power Corp (KEPCO) was up 900 won at 26,000.

Large-cap telecom stocks fared well with top mobile service provider SK Telecom gaining 100,000 won to 4.1 million won.

Analysts said news that SK Telecom would propose a 10-for-1 stock split on Friday at its general shareholders meeting propped up the share price.

"The news on SK Telecom's stock spilt isn't news but it did help boost investors' sentiment in a gloomy market," said Choo Hee-yup, a market strategist at Dongwon Securities.

Investors also bought state-run Korea Telecom, which gained 3,000 won to 97,000. The technology-laden Kosdaq over-the-counter market was down 5.64 points or 2.08 percent at 265.50 as large-cap tech stocks fell.

Indisystem, an Internet website developer, was down 40,000 won at 360,000.

Computer component maker Jacetec fell 19,500 won to 228,000.

Analysts said a sharp overnight drop on the Nasdaq composite index sparked sales in tech and Internet-related stocks. On the main exchange, trade volume totalled 296.82 million shares, down from Wednesday's 312.90 million shares.

Trade was valued at 2.99 trillion won compared to 3.31 trillion won on Wednesday.

Individual investors sold a net 70.8 billion won worth of shares.

Institutional investors sold a net 63.9 billion won worth of shares with investment trust companies separately selling a net 39.7 billion won.

Foreign investors bought a net 123.5 billion won worth.

Dley Dean Witter, said: "Even though the BOJ is saying there is no meaning in the reserve excess level, the market would still be suspicious if the bank actually cuts it."

"So market people are not going to stop calculating the reserve level projections on their own for a while."

BOJ FEARS SENDING WRONG MESSAGE

Minutes of the BOJ Policy Board's February 10 meeting, released on Monday, revealed that board members were concerned about giving a wrong message by cutting the reserve excess.

One board member suggested the bank should consider lowering daily reserve excess, since the BOJ's fund injection offers recently had not been fully met by bids from banks due to weak fund demand.

But other members opposed this idea, arguing such a move could be misinterpreted by the market because some market players still "incorrectly believed" that reserve projections reflect monetary policy, the minutes said.

The majority of the BOJ's nine-member policy board were probably concerneng Japan's fragile economic recovery, analysts said.

Totan's Katoh said: "Judging from the minutes, it seems quite unlikely that the BOJ would allow the projected reserve excess to fall below one trillion yen in the near term, as such a move could send a wrong signal to the foreign exchange market."

THE SITUATION ON THURSDAY

The BOJ said on Thursday that it sees a daily projected decrease of 400 billion yen in its current account balance.

"We allowed the current accounts balance to decline because market conditions are calmer compared to the previous day," a BOJ official told Reuters.

But he declined to comment on the projected fund surplus in the money market calculated under the old format.

According to calculations by money market dealers, the BOJ left a projected fund surplus of 1.2 trillion yen, down from a surplus of 1.4 trillion yen on Wednesday. -Reuters