The Korea Futures Exchange Weekly Bulletin February 25 To March 1

Following the previous week's mild upward trend, the KOSDAQ50 Index futures market represented some strength over the week.
In spite of the continued strength in the local stock markets, the KTB futures market rallied over the week as we just saw during the previous week.
The strong tie between the foreign investor's purchasing pattern in local stock markets and the price of USD/KRW seemed to continue this week.

KOFEX Market Trend

KOSDAQ50 Index Futures Market

Following the previous week's mild upward trend, the KOSDAQ50 Index futures market represented some strength over the week. The lead month contract KQ203 rose 2.35 points or 2.21 percent during the week compared to an increase of 1.87 percent of the previous week. And eventually it reached at 108.35 points on Thursday.

At the same time, both the KOSPI and KOSDAQ Comp Index have been strong through the week gaining 27.99 points or 3.53 percent or 1.65 points or 2.14 percent closing the week at 819.99 points or 78.71 points.

The major reasons for the strength are as follows:

Great amount of net purchasing by institutional investors in the main Seoul bourse this week totaling up to KRW 736.1 billion
Announcements of several market-friendly domestic and US economic indicators: e.g. the U.S. Commerce Department saying Thursday consumer spending grew at a six percent rate in the fourth quarter of 2001

Furthermore, thanks to the Anniversary of the Independence Movement of March 1st, 1919, there was no transaction at KOFEX on Friday.

Korea Treasury bond Futures Market This week, in spite of the continued strength in the local stock markets, the KTB futures market rallied over the week as we just saw during the previous week. At KOFEX long-term bond futures market, the lead month contract KTB203 gained 82 ticks during the week reaching at a record high of this year of 108.35 on Thursday.

The major reasons for the strength are as follows:

Success of F/X bond auction on Monday where an amount of KRW 700 billion was sold out at a rate of 6.70 percent
Institutional investor's buying spree amid ample market liquidity
FRB Chairman Alan Greenspan's remarks on Wednesday that the US economy will rebound slowly

Meanwhile, at the cash fixed-income market, the yield of benchmark 3-yr K-Treasury bond dropped to the year's lowest level of 5.71 percent on Thursday, down 22 ticks from the previous weekend's close. The figure is the lowest in three months since it recorded 6.61 percent on Dec 3, 2001. Furthermore the yield of three-year corporate bonds also lost 13 ticks on Thursday to 6.68 percent from the previous day.

The average daily volume in the KTB futures market increased 14,693 contracts or 38.3 percent from the previous week to post at 53,043 contracts.

USD/KRW Currency Futures Market

A strong tie between the foreign investor's purchasing pattern in local stock markets and the price of USD/KRW seemed to continue this week. While the foreign investors were selling their stock in the Seoul bourse as much as KRW 588.5 billion, the price of the lead month contract USD203 at KOFEX F/X market increased by KRW 1.2 per USD finishing the week at KRW 1,325.3.

In the meantime, the KOSPI gained 3.53 points during the same time.

The average daily volume in the USD/KRW futures market posted 4,963 contracts, up 2,086 contracts or 72.5 percent from the previous week.