SEOUL, July 30 (Xinhua) -- South Korean shares hit a three-year high Wednesday, keeping its upward trend after new finance minister vowed to maintain fiscal stimulus until at least 2015.
Business sentiment worsened after the deadly ferry disaster, raising possibilities for Bank of Korea (BOK)'s policy rate cut as early as in August.
The benchmark Korea Composite Stock Price Index (KOSPI) jumped 20.64 points, or 1 percent, to close at 2,082.61, the highest since Aug. 2, 2011 when it touched 2,121. Trading volume stood at 338.28 million shares worth 6.43 trillion won (6.28 billion U.S. dollars).
The local stock market has rallied after Finance Minister Choi Kyung-hwan stressed the need for an expansionary policy, both fiscal and monetary, for the time being. He promised to keep the fiscal stimulus by at least next year and, if necessary, later on.
The finance ministry unveiled a plan to spend more than 40 trillion won to boost the economy, which has faltered after the deadly ferry disaster that left more than 300 people, mostly high school students, dead or missing.
Consumers refrained from entertainment and travel after the ferry Sewol capsized and sank off the southwestern coast on April 16.
Business sentiment continued to worsen after the ferry disaster, boosting expectations the central bank may cut its policy rate as early as next month.
Market watchers forecast the main index would keep its upward trend as it rose above the narrow range of 1,850-2,050, in which the KOSPI has been locked over the past three years.
Foreign investors maintained a buying trend for 12 straight sessions by snapping up nearly 600 billion won worth of shares. Financial investment companies and insurers bought stocks worth 44. 7 billion won and 158 billion won each, but investment trust and retail investors sold shares worth 177.2 billion won and 579.7 billion won to lock in profits.
Telecom shares rose sharply on higher dividend payments. Top wireless carrier SK Telecom surged 5.9 percent and its smaller rival KT jumped 6.5 percent. Market bellwether Samsung Electronics rose 0.7 percent, and the nation's biggest web search engine Naver soared 4.8 percent.
Memory chip giant SK Hynix advanced 5.3 percent, the first rise in five sessions, on views that the recent decline was overdone. The No.1 carmaker Hyundai Motor climbed 3 percent, and the nation' s biggest auto parts maker Hyundai Mobis gained 2 percent.
Hyundai Heavy Industries, the world's largest shipbuilder, plunged 9.5 percent on disappointing earnings results. After the closing bell on Tuesday, the company said it recorded an operating loss of 1.1 trillion won in the second quarter. It was much worse than a market consensus of 37.5 billion won in operating loss.
Other shipbuilders lost ground. Samsung Heavy Industries sank 3. 3 percent, and Daewoo Shipbuilding & Marine Engineering tumbled 5. 6 percent.
The South Korean currency finished at 1,024.3 won against the greenback, up 0.1 won from Tuesday's close.
Bond prices ended mixed. The yield on the liquid three-year treasury notes fell 0.006 percentage point to 2.512 percent, but the return on the benchmark 10-year government bonds inched up 0. 001 percentage point to 3.035 percent.