South Korean shares edged higher on Friday, wrapping up a fifth straight week of gains as softer-than-expected U.S. inflation data reinforced expectations of Federal Reserve rate cuts, lifting investor sentiment across Asia. Meanwhile, the Korean won strengthened, and bond yields declined, reflecting increased demand for safe assets.
KOSPI Gains for Fifth Consecutive Week
The KOSPI index rose 0.05% to 2,622.67 in early Friday trade, driven by a rally in select tech and auto stocks. For the week, the benchmark index is up 1.79%, extending its year-to-date gain to 9.30%.
This sustained upward trend is fueled by growing optimism about global monetary easing, especially from the United States. Expectations of two Fed rate cuts in 2025 have spilled over into South Korean markets, improving the outlook for domestic rate policy and equity valuations.
Mixed Performance Among Index Heavyweights
Market reaction was mixed among key KOSPI components:
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Samsung Electronics fell 0.87%, slightly weighing on the index.
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SK Hynix surged 2.74%, benefitting from the rebound in semiconductor demand.
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LG Energy Solution, a major battery producer, dropped sharply by 4.07%.
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Hyundai Motor and Kia gained 0.47% and 0.66% respectively.
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POSCO Holdings, a major steelmaker, lost 0.8%, reflecting global industrial uncertainty.
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Samsung Biologics edged up 0.10%, contributing mildly to healthcare sector strength.
Out of 933 traded issues, 305 advanced while 586 declined, indicating some caution beneath the headline gains.
Foreign Inflows and Currency Movements
Foreign investors were net buyers of 47.8 billion won (approximately $34.2 million) worth of South Korean stocks, showing continued interest from global funds.
The Korean won was marginally stronger at 1,397.9 per USD, up 0.01% from the previous session. Offshore, the won stood at 1,397.3 per dollar, while non-deliverable forward (NDF) contracts priced the one-month won at 1,394.2, suggesting stable expectations ahead.
So far in 2025, the won has appreciated 5.3% against the US dollar, aided by narrowing rate differentials and cooling inflation globally.
Bond Market Signals Lower Rate Expectations
South Korea’s treasury bond yields declined in tandem with U.S. Treasury movements:
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Three-year Korean treasury bond yields fell 4.0 basis points to 2.321%.
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Ten-year yields dropped 4.9 basis points to 2.681%.
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June futures on 3-year treasuries gained 0.1 point to 107.65, indicating increased demand for bonds.
These shifts underscore investor confidence in an easing interest rate trajectory, both locally and internationally.
