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Seoul shares hit 7-wk high on autos, foreign buying
May 22, 2013 / 2:26 AM / 4 years ago

Seoul shares hit 7-wk high on autos, foreign buying

* Seoul shares rise as foreign buying continues for a 4th day

* LG Innotek hits more than a year high

* Auto stocks rally on export data, hopes over union agreement

SEOUL, May 22 (Reuters) - South Korean shares climbed to a seven-week high on Wednesday led by automakers after Federal Reserve officials played down the chances of scaling back the U.S. central bank’s stimulus programme.

Further gains were capped on caution ahead of Fed Chairman Ben Bernanke’s testimony to Congress later in the day.

“Broadly speaking, the market’s recovery momentum will continue through the third quarter this year, fuelled chiefly by positive effects from global governments’ supportive policy measures,” said Park Sung-hyun, an analyst at Hanwha Securities.

Two senior Federal Reserve officials on Tuesday suggested the central bank will continue its bond buying programme, which helped push U.S. stocks to record closing highs.

Bernanke is due to testify before the U.S. congressional Joint Economic Committee at 1400 GMT.

The Korea Composite Stock Price Index was up 0.59 percent at 1,992.78 points at 0145 GMT, after hitting a high of 1,995.20 points, the highest level seen since early April.

The market will however meet resistance at 2,200 points, the previous high hit in March this year as investors globally remain conservative about emerging markets, Park said. Preference for assets denominated in hard currencies such as the U.S. dollar and Japanese yen may remain strong, Park added.

Foreign investors were buyers of a net 47.7 billion won worth of stocks, purchasing shares for a fourth straight session.

LG Innotek shares rallied nearly 6 percent to more than a year-high, as the maker of light emitting diode (LED) products and display parts was expected to see its second quarter operating profit more than double year-on-year, analysts said.

“LED business, which have been struggling so far, is turning around robustly. Its smartphone parts business is faring very well,” said Kim Ji-san, an analyst at Kiwoom Securities.

Auto exporters drew support after data late on Tuesday showed South Korean exports so far this month were roughly flat from a year earlier, suggesting the impact from the yen’s dramatic slide has so far been less severe than feared.

Hyundai Motor shares advanced 1.5 percent, lifted further by a media report the company was closer to reaching an agreement with its union over re-starting weekend shifts.

Kia Motors shares, the second most busily traded share on the KOSPI, advanced 3.7 percent.

Hanjin Shipping shares rose 4 percent after a successful bond issue. The firm raised 300 billion won in capital, according to KDB Daewoo Securities, its lead banker.

“[Bond issuance] will not solve its deeper issues -- the shipping sector’s severe downturn -- however it will immediately help resolve liquidity issues,” said Shin Min-suk, an analyst at Shinhan Investment Corp. (Reporting by Jungyoun Park; Editing by Sanjeev Miglani)

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