South Korean shares rebounded early on Tuesday, aided by a sharp reversal in technology firms such as LG Display , while the market priced in the prospect of a rise in U.S. interest rates this week. The Korea Composite Stock Price Index (KOSPI) rose 0.4 percent to 2,368.32 points by 0242 GMT.
“Market players believe there can be no other scenario than a rate hike from the Fed’s June policy meeting. The focus is more on hints for another rate hike at the end of the year and guidelines for how it will reduce its massive balance sheet,” said Kim Ji-hyung, a stock analyst at Hanyang Securities.
Kim added that the Fed’s decision will not hurt current firm fundamentals in the local economy and the KOSPI will continue to rally after digesting the event. Domestic institutions purchased a net 95.6 billion won ($84.69 million) worth of KOSPI shares near mid-session, offsetting foreign investors’ stock-selling of 59.3 billion won worth.
Shares of LG Display fully made up for the previous day’s losses by jumping nearly 6 percent. Most tech shares also showed moderate gains with the sub-index up 0.4 percent. Automobile manufacturer Hyundai Motor gained 2.2 percent. Advancers outnumbered decliners 542 to 249.
Meanwhile, the South Korean won turned slightly weaker ahead of the Fed’s two-day policy meeting which begins later on Tuesday, with traders cautious as they await comments from Fed Chair Janet Yellen. The won stood at 1,129.6 to the dollar, down 0.2 percent versus Monday’s close of 1,127.3. June futures on three-year treasury bonds rose 0.01 point to 109.49.