South Korea’s benchmark Korea Composite Stock Price Index (Kospi) rallied on Wednesday to recover above 2,100 for the first time in 100 days as the government’s largest-ever extra budget of 35.3 trillion won ($29 billion) spurred expectations for economic recovery.

The main stock index Kospi finished 2.87 percent higher on Wednesday at 2,147.00 after hitting the intraday high of 2,156.55. The index opened 1.02 percent higher from previous day’s closing at 2,108.55.

Kospi recovered above 2,100 for the first time since 2,103.61 on Feb. 25 after gaining for four straight trading days. Trading volume also hit a record high of 16.7 trillion won.

The market was buoyed by institutional investors who gobbled 1.16 trillion won worth stocks and foreigners net purchased 204.1 billion won worth of stocks. Retail investors were net sellers.

Investors cheered news that the Korean government packaged a third supplementary budget in yet another record scale of 35.3 trillion won to combat against the economic crisis triggered by the COVID-19 pandemic. This is the third extra budget for this year following 11.7 trillion won created in March and 12.2 trillion won in April.

The third increase is the country’s biggest supplementary size, beating 28.4 trillion won in 2009 in the wake of global financial meltdown and 13.9 trillion won in 1998 following the Asian financial crisis that put Korea on international bailout.

The government earmarked the record high extra budget not only to overcome the virus-driven economic fallout but also to prepare for the post-COVID-19 era.

“Despite lingering uncertainties over prolonged disputes between the U.S. and China and the social unrest in the U.S. trigged by mass protests, the Korean stock markets managed to extend gains on expectations for global economic recovery,” said Seo Sang-young, an analyst at Kiwoom Securities. “Korean stocks are expected to take positive cues from U.S. stocks that also extended the winning streaks in the previous day on expectations of economic reopening.”

Shares of market bellwether Samsung Electronics Co. gained 6.03 percent to close at 54,500 won, recovering to the pre COVID-19 level. Before COVID-19 swept the coronavirus, the tech giant’s shares were trading at the 54,000 won level in early March. But the company shares fell to as low as 42,300 won in mid-March when the country was reeling from the fast spreading coronavirus at home and abroad.

Shares of another chip giant SK Hynix Inc. also jumped 6.48 percent to finish at 88,700 won. The chipmaker’s shares hit the lowest level of 65,000 won in mid-March due to concerns ovet the coronavirus-driven economic fallout.

Market analysts noted that concerns still remain over companies’ weak second quarter earnings but there is growing expectations over improvement amid easing economic lockdown at home and abroad.

Bank, steel, securities and machinery stocks also climbed by 4 to 8 percent on economic recovery.

In the main bourse, 517 stocks rose while 344 stocks declined on Wednesday.

The secondary Korea Securities Dealers Automated Quotation (Kosdaq), meanwhile, finished 0.8 percent lower at 737.66. Retail investors net purchased 351.1 billion won while institutional and foreign investors were net sellers.

The Korean won gained 6.00 won against the U.S. dollar to close at 1,216.5 won. The local currency strengthened on hopes for economic recovery after major economies laid out stimulus measures.

Bond prices dropped. The three-year government bond yield rose 1.5 basis points to 0.866 percent and the 10-year bond yield 4.8 basis points to 1.426 percent.

By Pulse

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]