South Korean shares advanced on Tuesday as Bank of Japan (BOJ)'s decision to delay bond purchases triggered stronger yen that would benefit local exporters competing with Japanese rivals.
The benchmark Korea Composite Stock Price Index (KOPSI) rose 9. 66 points, or 0.49 percent, to close at 1,996.52. Trading volume stood at 548.26 million shares worth 4.18 trillion won (3.93 billion U.S. dollars).
Auto and electronics companies, which compete fiercely with Japanese rivals in the global market, led the KOSPI higher amid the stronger yen. Market bellwether Samsung Electronics advanced 1. 8 percent to 1,480,000 won, and top automaker Hyundai Motor jumped 1.9 percent. The nation's No.2 carmaker Kia Motors gained 1.7 percent.
The BOJ said it will start open-ended bond purchases from January 2014, while setting a 2-percent inflation target without mentioning a time limit. The delayed bond purchase and the absence of the time limit led the yen to rise against the dollar, benefiting local exporters, especially auto and electronics companies.
The Japanese central bank said it will buy around 13 trillion won (145 billion U.S. dollars) in Japanese government bonds and treasury bills per month, 3 trillion yen larger than initially forecast. The inflation target is a percentage point higher than before.
Institutional investors led the market advance by purchasing a net 229.1 billion won worth of stocks. Foreigners sold local stocks worth 211.3 billion won, and retail investors bought shares 6.3 billion won.
SK Telecom, South Korea's No.1 mobile carrier, jumped 2.66 percent, rising more than 10 percent over the past 10 trading days. Top life insurer Samsung Life Insurance and memory chip giant SK Hynix decline over 2 percent, and retail giant Lotte Shopping sank 3.6 percent.
The local currency finished at 1,062.3 won against the greenback, up 0.6 won from Monday's close.
Bond prices ended higher. The yield on the liquid three-year treasury notes lost 0.01 percentage point to 2.73 percent, but the return on the benchmark five-year government bonds fell 0.01 percentage point to 2.84 percent.
