20000125

Korea stocks end up buoyed by govt steps, Daewoo

SEOUL: South Korea stocks managed to post marginal gains on Monday as investors responded positively to steps announced by the central bank and government to ensure stable financial markets, brokers and analysts said. The Korea Composite Stock Price Index ended the day up 1.61 points or 0.17 percent at 926.77 points.

The central bank and government announced steps to ensure liquidity at merchant banks after authorities ordered Nara Investment Banking Corp to suspend operations for three months on Friday.

The day's gains were led by buying of low-priced large caps as well as Daewoo shares which were buoyed by news its foreign creditors agreed on the weekend to a debt buyout offer, analysts said.

The over-the-counter Kosdaq index was up 4.10 percent to 199.75 points, helped by Friday's gains on the technology-laced Nasdaq Composite index ."Sentiment improved due to the government measures but the market looked directionless," said Choi Chang-Hwa, a broker at Good Morning Securities.

The Financial Supervisory Commission announced it would provide 62 billion won to merchant banks to ease any possible liquidity crunch following the suspension of Nara's operations.

In the morning, buying centred on low-priced large caps though many succumbed to late profit-taking by domestic institutions, analysts said.

They said Daewoo-related shares fared well for the day with core units of the group hitting daily limit highs.

Investors expect the Daewoo Group's 1/8DWGR.CN3/8 weekend deal to clear the way for debt restructuring programmes aimed at returning its core units to health, analysts said. Daewoo Corp rose 75 won or 15 percent to hit a daily limit high at 575 won.

Daewoo Electronics also ending at its limit high, up 360 won or 15 percent at 2,760 won.

Analysts said market talk of a large-scale bonus issue by SK Telecom boosted its share price, which contributing to the KOSPI's gain on the day, though company officials denied the rumours.

SK Telecom closed up 305,000 won or 8.7 percent at 3.81 million won.

Brokers said they expect the market to keep to a boxed range of 900-950 points as investors want to see how the market behaves after February 8.

From February 8 the government plans to allow investors to redeem 95 percent of their beneficiary certificates linked to Daewoo-issued uncollateralised bonds held by funds managed by investment trust companies.

"Right now, the market is feeling very fragile, with no strong buying force to absorb selling pressure," said Chi Hwa-Cheol, a strategist at Korea Investment Trust Co. On the main board, trade volume totalled 210.4 million shares compared with Friday's 255.14 million shares.

Trade was valued at 2.83 trillion won against 3.49 trillion won on Friday.

Advancing shares outnumbered decliners 446 to 359 with 81 shares unchanged.

Foreign investors bought a net 37.4 billion won worth of shares while domestic institutions bought a net 58.0 billion won worth.

Individual investors were net sellers of 77.7 billion won.-Reuters