Stocks and currency gained sharply in the domestic market Wednesday on the back of Standard & Poor’s upgrade of Korea’s sovereign rating a day earlier and the overnight increase of the U.S. bourse.

The benchmark KOSPI rose 37.89 points, or 1.96 percent, from the previous trading session to close at 1,975.45. This marked the highest in one month since it reached 1,983.46 on Aug. 13.

The equities’ gain is drawing attention as it comes ahead of the interest rate-setting meeting of Federal Open Market Committee, slated for Sept. 16-17 in Washington.

The majority of local brokerages expect a delay of the tighter monetary policy in the U.S., shifting from their earlier anticipation of a hike -- for the first time in nine years since June 2006 while it stands at 0.25 percent per annum -- this month.

While they claim the possible delay could be linked to the Korean stock gains, others -- including those who still bet on a hike -- say that the risks have already been sufficiently reflected in the stock market over the past few months.
 

Foreign investors net-bought local stocks for the first time in more than a month after maintaining their net-seller position for the 29th consecutive session starting from Aug. 5.

Foreigners net purchased stocks worth 213.3 billion won ($181.5 million). While local institutional investors also posted net-buying worth 358.5 billion won and small investors offloaded 593.7 billion won worth stocks.

The secondary KOSDAQ also rose to close at 676.48, up 1.46 percent from a session earlier.

“The sentiment of relief has expanded on the bourse, as (more) market participants appear to believe that the U.S. would not choose to raise the base rate this month, or even if it is raised, (the Federal Reserve) would again take a dovish stance (without vowing a further hike) for a certain period,” said a Samsung Securities analyst.

He added the S&P’s revision of its appraisal on Korea’s rating upward also contributed the KOSPI and KOSDAQ increases.

The U.S. dollar also lost ground versus the Korean won, sliding 10.8 won from a session earlier to finish 1,175.9 won. The greenback has hovered around the 1,180-1,200 won mark for the past month.

“In the wake of S&P’s upgrade, there has been an active offshore dollar selling,” said Samsung Futures research analyst Jeon Seung-ji.

But she added the uncertainty still lingers on over the coming level of the exchange rate amid divided opinion on the likelihood of a U.S. rate hike.

By Kim Yon-se (kys@heraldcorp.com)