Bullish U.S. market, falling exchange rate push up stock prices

Korean stocks rallied strongly Friday after the won-dollar exchange rate fell following the central bank`s aggressive intervention in the foreign exchange market, coupled with an overnight climb on the U.S. stock market. The Korea Composite Stock Price Index (KOSPI) shot up 12.53 points, or 2.5 percent, from the previous day to close the day at 506.22. All blue-chip stocks, including Samsung Electronics, SK Telecom Pohang Iron and Steel Corporation (POSCO), and Korea Electric Power Corp. (KEPCO), rose sharply.

On the other hand, the delayed merger between Kookmin and Housing & Commercial Banks dampened investors` spirits and pushed down the shares of the two banks by 1.10 percent and 2.11 percent, respectively, from a day earlier. Securities firms suffered steep falls recently, but closed the day higher after the government unveiled a plan to inject pension and other state-policy funds into the stock market. The index for securities firms closed at 1,027.69, up 28.48 points from the previous day. Daewoo Shipbuilding and Marine Engineering, which was predicted to graduate from a workout program earlier than scheduled based on its improved performance in the first half of this year, was limit-up. Youngone Corp., which was cited as a stock benefiting from the won`s depreciation, closed lower for the third consecutive day as the won-dollar exchange rate showed signs of stabilization.

Gainers led decliners 625 to 180. Twenty stocks newly joined the limit-up group while 15 newly joined the limit-down group. Foreign and Individual investors bought 154.4 billion won and 23.8 billion won more than they sold, respectively. Institutional investors recorded 111.7 billion won in net selling, marking the largest volume since Feb. 27. Meanwhile, the KOSPI200 index for June recorded 62.90, up 0.95 point from the previous day.

Oh Jun-Seok droh@donga.com