Seoul shares jump over 2 pct on Asian market gains

SEOUL, Oct. 20 (Yonhap) -- South Korean stocks jumped over 2 percent Monday after
volatile trading as Asian market gains offset investors' doubts over the
effectiveness of the government's financial stabilization package, analysts said.
The local currency rose against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) climbed 26.96 points, or
2.28 percent, to 1,207.63. Volume was moderate at 368.1 million shares worth 5.61
trillion won (US$4.31 billion), with gainers outpacing losers 405 to 402.
"The Seoul market saw volatility as investors remained doubtful over whether the
government's financial stabilization package could effectively ease the current
credit crunch," said Lee Sun-yup, an analyst at Goodmorning Shinhan Securities
Co.
"But gains in Asian markets and market expectations that the government is set to
unveil measures to tackle the slumping construction market lifted sentiment in
late trading."
South Korea announced Sunday that it will provide $100 billion worth of state
guarantees for local banks' foreign debts as part of efforts to ease the dollar
shortage in the local financial sector and shore up market confidence.
The government and the central bank will also supply $30 billion to local banks
and exporters by using its foreign reserve holdings.
Despite the sweeping measures the KOSPI fluctuated, dipping 2.65 percent at one
point due to doubts over the effect of the government's interventions. The Asian
markets gained momentum with Japan's benchmark Nikkei 225 Stock Average climbing
3.59 percent.
Bank shares traded in positive territory on the back of the government's package.
No. 2 financial services company Shinhan Financial Group jumped 5.34 percent to
35,500 won and KB Financial Group, the holding company of Kookmin Bank, rose 2.76
percent to 39,050 won.
But shares of the state-invested Industrial Bank of Korea (IBK) tumbled 6.23
percent to 7,980 won on concerns that the government's plan to inject 1 trillion
won into the lender may dilute share value. The government said it will inject
capital into IBK as part of a bid to increase the bank's lending capacity by 12
trillion won for cash-strapped smaller companies.
Exporters gained ground. Market leader Samsung Electronics rose 3.17 percent to
521,000 won and top carmaker Hyundai Motor soared 12.04 percent to 60,500 won.
The local currency closed at 1,315 won to the dollar, up 19 won from Friday's
close, as investor sentiment was lifted by the government's package to ease a
liquidity crunch and stabilize the financial sector, dealers said.