Aug. 27 (Bloomberg) -- KB Financial Group Inc., owner of South Korea’s largest bank, led gains among financial stocks in Seoul after Moody’s Investors Service raised the nation’s sovereign-debt rating.
KB Financial climbed 3.7 percent, the biggest gain since July 3, at the close of trading on the Korea Exchange. Woori Finance Holdings Co., South Korea’s biggest financial group by assets, gained 4.1 percent and Shinhan Financial Group Co. added 2.6 percent. The benchmark Kospi index dropped 0.1 percent.
South Korea’s sovereign debt rating was raised one step to to Aa3 by Moody’s, putting it on a par with Japan, after Asia’s fourth-largest economy strengthened its resilience to shocks and the risk of a North Korean collapse receded.
“The sovereign ratings upgrade will help lower banks’ funding costs,” Koo Kyung Hwe, a Seoul-based analyst at Hyundai Securities Co. said by phone. “It also improves investor sentiment for the banking sector because it reassures people of the healthiness of South Korea’s economy.”
The nation’s strong fiscal fundamentals enable a relatively large degree of policy space to cope with domestic risks and external shocks, according to Moody’s statement today. The country’s macro-prudential regulatory measures and improved risk management also reduced banks’ external vulnerability, the ratings company said.
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