South Korean stocks rise after President Park’s impeachment ruling
South Korean stocks rose slightly on Friday amid growing political uncertainty after President Park Geun-hye’s impeachment ruling.
The benchmark Kospi gained 0.3 percent or 6.3 points to close at 2,097.35 after the Constitutional Court upheld a parliament vote made late last year to impeach Park. She will now leave the office immediately and snap elections must be held within 60 days for her replacement.
Large crowds of supporters and critics of Park gathered in downtown Seoul in rowdy and intense sloganeering, with thousands waving the national flag and clamoring on top of buses. The police stepped up security in the central areas and mobilized more than 20,000 officers to stand guard.
This decision will drive South Korea “into near-term political uncertainty and the likely further escalation of economic risks facing South Korea,” said Rajiv Biswas, Asia Pacific chief economist at IHS Markit, in a Friday note.
Biswas added that the country is “entering a political vacuum at a time when tensions with North Korea have escalated to crisis point” and when relations with China are tense.
South Korean companies doing business in China have faced pressure, including boycotts and cyber-attacks, over the U.S.-deployed anti-missile defense system which Beijing views as a threat. The trade relationship is an important one for South Korea, whose exports to China account for 25.1 percent of total South Korean exports, according to data from IHS Markit.
Meanwhile, the won opened weaker in onshore trade at 1,161 per dollar versus 1,158.1 at the previous close. At 2:45 pm HK/SIN, the won was stronger against the dollar, at 1,156.33.
The Shanghai composite was down 0.13 percent or 4.3 points at 3,212.42 and the Shenzhen composite gained 2,013.31 percent or 4 points to end at 2,013.64. Hong Kong’s Hang Seng was down 0.27 percent by the afternoon.
China’s Fosun Pharmaceuticals is holding early-stage talks with buyout funds including CVC about a potential joint bid for German generic drugmaker Stada, Reuters reported. Fosun Pharma shares were up 1.18 percent.
Japanese benchmark Nikkei 225 closed sharply higher, up 1.48 percent or 286 points at 19,604.61 as the yen weakened against the greenback.
Toshiba shares plunged 4 percent during early trade before sliding up 1.71 percent. The volatility was likely over concerns that Toshiba’s U.S. subsidiary hired bankruptcy attorneys to consider Chapter 11 filing as an option to help with a multi-billion dollar write-down.
Australia’s ASX 200 finished in positive territory, up 0.6 percent or 34.4 points at 5,811.2.
Another focus for traders is the U.S. nonfarm payrolls, which is due later in the day. The payrolls are a key indicator which will provide hints as to whether the Federal Reserve will raise rates at its meeting next week.
“This is the last piece of puzzle when it comes to the US interest rate hike which the Fed is going to make. So far the Fed has adopted a very hawkish tone when it comes to the interest rate hike,” said Naeem Aslam, chief market analyst from ThinkMarkets in a Friday note.
Nonfarm payrolls in February are expected to have gained 190,000 jobs after shooting up 227,000 in January, according to a Reuters poll of economists.
Over in the U.S., the Dow Jones industrial average was nearly flat at 20,858.19, while the S&P 500 was up 0.08 percent at 2,364.87 and the Nasdaq composite was also nearly flat at 5,838.81.
Yesterday the European Central Bank (ECB) kept its benchmark interest rate unchanged and said it would keep its massive asset-buying program.
The ECB removed a reference to using all available measures to induce growth and inflation “because the sense of urgency is not there,” ECB President Mario Draghi said.
The comment from suggested that rates are unlikely to fall and might start rising, as inflation trends higher in Europe, said Michael McCarthy, chief market strategist at CMC Markets, in a Friday note.
The euro surged after his comments, above the $1.06 level before slipping to $1.0592 at 2:45 pm HK/SIN.
In the broader FX market, the dollar traded at 101.92 against a basket of currencies, slipping below the 102 handle it was at in the morning. Against the greenback, the yen was weaker at 115.42 while the Australian dollar was under pressure at $0.7521.
During Asian hours on Friday, Brent crude was up 0.67 percent at $52.54 per barrel, while U.S. crude added 0.81 percent to $49.68, still below the $50 mark.
Oil prices plunged to its lowest on Thursday U.S. time since the Organization of Petroleum Exporting Countries (OPEC) deal on Nov. 30.
Saudi officials held closed-door meetings with five major U.S. producers and warned executives that OPEC would not be extending output curbs to offset rising production from U.S. shale fields, Reuters reported.
U.S. crude inventory had jumped last by week by 8.2 million barrels, which was four times more than estimates from a Reuters poll.
Source: CNBC
