South Korean stocks are likely to remain in a tight range in the coming week as the market lacks positive leads, but the upcoming announcements of U.S. and domestic economic indicators might cause volatility, analysts said Saturday.
The benchmark Korea Composite Stock Price Index (KOSPI) closed at 1,421.73 this week, up 9.51 points or 0.68 percent from a week earlier as massive program buying pulled up the market. Since the main index hit the 1,400-point mark on Nov. 14 for the first time in the past six months, stable investor sentiment kept it from falling below this level.
The tech-heavy KOSDAQ index ended at 616.68 on Friday, up 5.79 points or 0.94 percent from the previous week.
The Bank of Korea on Thursday raised the reserve ratio on demand deposits to 7 percent from the current 5 percent for the first time since February 1990 to reduce the money supply and help stabilize real estate prices. The hike, however, had a limited impact on the market, the analysts said.
But a series of economic indicators scheduled to be released next week may draw investors' attention. The United States is slated to announce data on consumer confidence, new home sales and consumer prices among others. South Korea is also expected to release data on industrial output. "Due to a lack of momentum, economic indicators will continue to affect the market heavily," Lee Gun-woong, an analyst at Daewoo Securities Co. said.
"With investors' eyes focused on economic fundamentals, program buying or selling will mostly influence the market," said Kim Joong-hyun, an analyst at Goodmorning Securities Co.
The performance of the U.S. economy exerts a significant influence on the South Korean stock market since foreign investors hold about half of the shares trading on the local bourse.
Seoul, Nov. 25 (Yonhap News)
Seoul shares forecast to remain flat next week |
