South Korea stocks bounce back as govt announces stimulus budget, coronavirus cases fall

South Korean shares closed up 1% on Tuesday after the government unveiled aggressive spending measures to blunt the economic damage from the Covid-19 pandemic and as manufacturing activity improved in China. The Korean won strengthened, and the benchmark bond yield rose. By 0632 GMT, the benchmark KOSPI rose 23.38 points, or 1.01%, to 2,349.55. Foreigners were net sellers of 209.7 billion South Korean won worth of shares on the main board.

South Korea said it was ready to boost policy support if the rate of cases worsen and unveiled plans to boost total spending by 8.5% to a record 555.8 trillion won ($468.92 billion) next year. Also helping sentiment, the Korea Centers for Disease Control and Prevention reported 235 new coronavirus cases as of midnight Monday, dropping slightly for five straight days.

Elsewhere, manufacturing activity in China expanded at the fastest clip in nearly a decade in August, as factories ramped up output to meet rebounding demand, a private survey showed.

The won was quoted at 1,183.0 per dollar on the onshore settlement platform, up 0.41% from its previous close of 1,187.8. In offshore trading, the won was quoted at 1,182.1 per dollar, up 0.5%, while in non-deliverable forward trading its one-month contract was quoted at 1,181.6. MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.26%. The KOSPI has risen 6.91% this year.

The trading volume during the session in the KOSPI index was 1,060.49 million shares. The most liquid 3-year Korean treasury bond yield rose by 3.9 basis points to 0.979%, while the benchmark 10-year yield rose by 7.2 basis points to 1.585%.