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UDPATE 1-S.Korea manufacturer confidence at 7-yr high
Reuters - Wednesday, March 31
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* Manufacturers upbeat on business outlook
* Findings contrast with recent signs of moderating growth
* C.bankers unanimous in keeping policy in Feb
By Yoo Choonsik
SEOUL, March 30 - An index measuring how South Korea's export-dependent manufacturing companies assess the business outlook for the coming month hit a seven-year high, easing concerns about fading momentum in global economic recovery.
The Bank of Korea said early on Tuesday that its manufacturing business survey index for the April outlook rose to 102, the highest level since the central bank started compiling the index in early 2003, up from 99 for March.
The findings from a survey of nearly 3,000 companies came despite recent data that raised doubts whether Asia's fourth-largest economy would stay on track for recovery after emerging from the crisis much ahead of expectations last year.
The robust business confidence index, firmer stock market and the central bank's reaffirmation of its intention to start tightening monetary policy this year combined to weigh down South Korea's longer-dated bonds on Tuesday.
"The strong BSI reinforces the view that companies will lead economic recovery, which in turn will increase domestic spending and company hiring," said Park Tae-keun, a fixed-income analyst at Hanwha Securities.
He said the robust figure helped raise stock prices and added to an already improving risk preference among investors, damping the safe-haven appeal of bonds.
The yield on benchmark five-year treasury bonds rose 3 basis points, while the three-year yield fell 2 basis points and one-year yield held steady, suggesting there was no significant change in the market's view on the interest rate policy.
Investors and analysts have pushed back their expectations for the timing of South Korea's interest rate increase to late this year after the Bank of Korea's recent cautious remarks on the economy.
Minutes from the central bank's Feb. 11 policy meeting, released late on Tuesday, showed all its board members voted to keep the policy interest rate at a record low, citing uncertainties over the global economy.
The Bank of Korea again held the rate steady at 2.0 percent for a 13th consecutive month at the following meeting early this month and minutes from the March 11 meeting will be announced in late April.
The government of President Lee Myung-bak has repeatedly and publicly opposed to raising interest rates before major economies do so, saying monetary policy should remain easy until major markets for South Korean exports fully recover.
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