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S.Korean shares set new closing high; technology, refiners rise

Published 04/05/2011, 03:12 AM
Updated 04/05/2011, 03:16 AM
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* KOSPI ends at 2,130.43 points, foreigners buy for 15th day

* Refiners rebound after sharp falls, gains seen sustaining

* Techs, chemical firms post solid gains, carriers slip

By Jungyoun Park

SEOUL, April 5 (Reuters) - Seoul shares set a new closing high for the benchmark index helped by foreign investors buying and supported by a gain in technology and refining stocks.

The Korea Composite Stock Price Index (KOSPI) ended up 0.69 percent at 2,130.43 points, the highest level ever.

Foreign investors bought a net 204.7 billion Korean won ($188,07 mln) worth of stocks, buying for a 15th straight session, their longest buying streak by them since October 2010.

Emerging Asian markets are attracting foreign interest on renewed optimism on global economy and as appetite for riskier assets grew, according to Yoo Soo-min, a market analyst at Hyundai Securities.

South Korean manufacturing and refining stocks are also expected to benefit from a virtual shutdown in Japan, following the earthquake and tsunami last month.

"South Korean stocks offer more attractive valuations than most other emerging Asian peers, and the comparative benefit from Japan's manufacturing shutdown is substantial," Yoo added.

Korean shares are trading at around 1.7 times the book value, lower than any other market in Asia ex-Japan except Kazakhstan, Thomson Reuters Starmine data showed. Asia ex-Japan's average is 2.3.

Chemical firms rallied on a robust earnings outlook. Refiners and chemical firms were widely seen posting strong sales following the shutdown of their Japanese peers.

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Shares in LG Chemical jumped 4.9 percent and Honam Petrochemical rallied 3.3 percent.

Technology issues also climbed, with LG Display ending up 3.4 percent.

"The market is sensing that the sector's bottom is near. Panel prices will rise this month as demand from tablet PC makers grows," said Jeff Kang, an analyst at Daishin Securities.

May is also a seasonally good month, and supply was expected to be tight as Taiwanese peers will have hard time securing parts due to shutdown of suppliers in Japan, Kang added.

Crude oil refiners rose, recovering from sharp losses on Monday after gasoline and diesel price cuts over the weekend.

Worries that top refiner SK Energy's price cuts could add to government pressure on other refiners to rein in energy costs sent their shares down sharply on Monday. [ID:nL3E7F410N]

"At the share's current levels, the market has largely digested negative implications of price cuts, which would weigh on second quarter earnings," said Cha Hong-sun, an analyst at Hanwha Securities.

Shares in SK Innovation , parent of SK Energy, were trading at a 12 month forward price earnings multiple of 8.8 and at 1.4 times its book value, ThomsonReuters Starmine data showed. This compared with the broader KOSPI's PE multiple and price-to-book value ratio of around 10 and 1.7 respectively.

"Investors are now more focused on longer-term earnings prospects, which are solid, thanks to high demand and limited supply," Cha added.

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Shares in S-Oil rose 3.8 percent and SK Innovation advanced 1.8 percent.

Air carriers dipped on oil price gains, which make imports of jet fuel more costly, with market leader Korean Air Line losing 0.9 percent and rival Asiana Airline down 1 percent.

The KOSPI 200 June futures rose 1.75 points at 283.80 and the KOSPI 200 spot index gained 2.02 points to 282.03. The junior Kosdaq market ended up 0.52 percent at 537.66.

Move on day +0.69 percent

12-month high 2,130.43 5 April 2011

12-month low 1,532.68 25 May 2010

Change on yr +3.87 percent

All-time high 2,130.43 5 April 2011

All-time low 93.10 6 JAN 1981

($1 = 1088.450 Korean Won) (Reporting by Jungyoun Park; Editing by Ramya Venugopal)

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