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Korea's ends higher as small caps advance

SEOUL: South Korea's benchmark index ended stronger on Monday as most small caps chalked up gains despite net selling by domestic investors, analysts said.

Electronics shares, which led last week's steep rise in the main index, succumbed to profit-taking, they said.

The Korea Composite Stock Price Index (KOSPI) closed up 14.50 points or 1.62 percent at 909.33."Buying interest is spreading across the main board. More investors are now eyeing small and medium-sized stocks", said Lee Young-mok, a strategist at Daewoo Securities.

Reflecting the trend, advancers led declining shares 752 to 116 with 26 shares unchanged in the broader market.

Analysts highlighted a shift of some funds back into the main exchange from the Kosdaq over-the-counter market as shares of companies with holdings in Internet-related venture firms sparkled on the main board.

"It looks like some of investors have been drawn away from the Kosdaq market into the KOSPI after foreign investors ignited a rally in the main exchange last week," said Sohn Jae-hwa, a strategist at Hanjin Securities.

Samsung Corp, a trading arm of Samsung Group, rose by its maximum limit-up to 14,100 won on reports the company would seek to list 10 venture firms in which it has invested on the Kosdaq or Nasdaq markets. Telecom shares also lent some support to the main market with top mobile phone service provider SK Telecom up 2.34 percent at 4.81 million won.

But key electronics shares fell prey to profit taking by domestic institutions, despite a steady foreign appetite.

A closely watched US electronics firm, Micron Technology lost 4.1 percent on Friday, contributing to weakness in the local electronics sector.

The sub-index for the sector dropped 3.10 percent on the day.

The world's largest memory chip maker, Samsung Electronics shed six percent to 282,000 won.The Kosdaq over-the-counter market closed down 1.52 percent at 268.25 as high-flying technology shares consolidated after its month-long bull run.

The market had risen some 57 percent between January 27 and March 2 before closing on Friday down 3.09 percent.

Internet-related shares led the slide.

Handysoft, a software developer, topped the net losers down 10.85 percent at 961,000 won.

Jacetec, a computer component maker, closed down 4.2 percent to 239,000 won.

Analysts said any large gains in the main index would be limited on Tuesday as investors are expected to be generally cautious ahead of the expiry of futures and options contracts on Thursday.

The market will also have to consolidate further before any big gains are seen, they said.On the main board, foreign investors bought a net 258.8 billion won worth of shares, sharply down from Friday's record buying of 855.8 billion won.

Domestic institutions sold a net 208.3 billion won worth of shares, while individual investors sold a net 150.4 billion won worth.

Trade volume totaled 352.6 million shares compared with on Friday's 311.3 million shares.

Trade was valued at 4.07 trillion won compared with 4.5 trillion won on Friday.-Reuters