S.Korean stocks rebound, Samsung units rally after profit-taking

Mon Jun 9, 2014 11:37pm EDT

* KOSPI rebounds as profit taking on Samsung units abate
    * Sentiment helped by selective RRR cuts for banks in China
    * Extended foreign inflows support local currency and stocks
    * Won holds its ground after hitting strongest since Aug. 7,
2008

    SEOUL, June 10 (Reuters) - Seoul shares rebounded on Tuesday
morning, as profit-taking on Samsung Group units abated after
dragging the market lower the previous day, and supported by
brighter prospects for the global economy after European Central
Bank eased policy last week.
    Plans for an initial public offering by Samsung Everland,
the group's de facto holding company have been a dominant factor
in the South Korean market for days, fuelling rallies in Samsung
unit shares before Monday's profit-taking.
    On Tuesday, Samsung Electronics Co Ltd, the
largest component in KOSPI, recovered 1.3 percent after posting
the biggest daily percentage drop since Jan 2. Its rival LG
Electronics Inc advanced 3.9 percent.
    A move by the Chinese central bank to give some banks more
lending power also helped sentiment, as China is South Korean
exporters largest market.
    Otherwise, investors were awaiting global index provider
MSCI's annual market classification, though analysts said it was
unlikely that South Korea will be promoted to developed market
status from its current emerging market position after coming
short last year.
    The Korea Composite Stock Price Index (KOSPI) was up
0.4 percent at 1,998.74 points as of 0245 GMT, after shedding
0.9 percent over the previous two sessions.
    "Central banks in the euro zone and China have bolstered
sentiment for riskier assets, supporting the market's attempt to
regain the 2,000 point threshold," said Samsung Securities
analyst Kim Yong-goo.
    The People's Bank of China on Monday said it will reduce  
the reserve requirement ratio by 50 basis points for those banks
with sizeable loans to the farm sector and small- and
medium-sized firms, adding to positive risk appetite stemming
from policy easing by the European Central Bank last
week. 
    Separately, four different types of options will expire in
Seoul futures and options on Thursday in quarterly convergence
known as quadruple witching, which could add volatility in the
equity market as traders unwind positions.  
    "With the quadruple witching day awaiting later in the week
while the won continues its strength, the market is bound for
turbulence near the current market level," Kim added.
    Foreign investors positioned as net buyers near mid-session,
purchasing 70 billion won ($68.9 million) worth of KOSPI shares.
    MSCI will announces it annual market classification review
later in the day.
    "There is virtually zero chance for the local market to be
reclassified as a developed market with market conditions
remaining the same from a year earlier," said Han Beom-ho, a
market analyst at Shinhan Investment Corp. 
    "China's A-shares are more likely to gain emerging market
status, which will stir some weighting adjustments within the
emerging market index and cause volatility in the local market."
    In the currency market, the won steadied after
briefly hitting a fresh six-year high as traders were wary of a
possible dollar-buying intervention by the South Korean
authorities to curb the pace of the won's appreciation.
    The won rose as high as 1,015.5 against the dollar early in
the session, the strongest level since Aug. 7, 2008.
    The won was quoted at 1,016.2 against the dollar
as of 0245 GMT, unchanged from Monday's onshore close at
1,016.2.
                       0245 GMT    Prev close
 Dollar/won            1,016.2       1,016.2
 Yen/won            9.9306/248        9.9117
 *KTB futures           106.07        106.04
 KOSPI                1,998.74      1,990.04
 * Front-month futures on three-year treasury bonds
($1 = 1016.0000 South Korean Won)

 (Reporting by Jungmin Jang; Editing by Simon Cameron-Moore)
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