Stock Index Soars to Nine-Month High

The stock index set another record high Friday, the highest mark in nine months, breaking the previous high of the year set three days ago.

At the same time, the yield on corporate bonds was over 6.0%, showing the greatest increase of the year.

The composite stock price index was up 13.74% yesterday, closing at 727.26. This marks a record high since December 3, 2002. The KODAQ rose by 0.33 percentage points for the first time in four days, closing at 49.66.

Several factors contributed to this rise. First, promising predictions are being published about the future of the U.S. and Korean economies. Also, North Korea accepted an offer for multilateral talks yesterday. North Korea`s acceptance, in particular, helped relieve the anxiety of many investors. Furthermore, Samsung Electronics’ stock, which foreign investors scrambled to buy, shot up by ten thousand won, or 1.4%, and closed at 426,000 won (approximately U.S. $340), a figure near the highest price the stock has ever reached (432,000 won on April 24, 2002).

Once the index shot through the mental Maginot Line of 724 points, more and more people expected the increasing trend to continue. But domestic investors, individual and corporate, are selling shares to cash in on the increase. So, without a rally on the part of foreign investors, it will be hard to breach the 750 mark.

The upward move was also reflected in the bond market. The yield on the three-year AA grade corporate bond, for example, was up 0.14%, closing at 6.01% per annum. This marked the first time since December 6, 2002 that the rate has closed at above 6%. The yield on the national bond was also up 0.17% and closed at 4.75%, another high since March 24 (4.75%).

Chan-Sun Hong hcs@donga.com