South Korean stocks are expected to gather ground this week after a steep decline, as fear of a sudden liquidity squeeze from an unwinding of the U.S. easy-money policy has waned, analysts said.

The benchmark Korea Composite Stock Price Index closed at 1,863.32 on Friday, up 2.22 percent from the previous week. The main index underwent a roller coaster trading, dipping more than 2 percent on the first two days before reverting back upon a strong rebound of 4.64 percent over the remaining three sessions.

The KOSPI lost ground earlier on worries that the U.S. Federal Reserve may start cutting down its stimulus package from later this year. China’s reluctance to supply liquidity in the money market unnerved investors as short-term rates hiked.

But the stock market got a boost on the back of several remarks from Fed officials in support of the quantitative easing, saying its economy still has a long way to go with recovery.

This week, the main index will likely further extend its winning binge with withering risks from the QE withdrawal.

“The U.S. exit strategy has the least likelihood of spreading any negative impact to systemic risks in our economy,” said Han Chi-hwan, an analyst at KDB Daewoo Securities Co.

Han was overweight on IT and auto blue-chips for next week, predicting a substantial foreign demand.

Tech heavyweight Samsung Electronics Co. is due to release its earnings guidance for the second quarter, which is expected to sufficiently meet the market consensus of 10 trillion won ($8.66 billion), Han added.

This week, foreigners scooped up a net 370 billion won, snapping its 14-day selling spree since June 7. Cyclical issues were the most bullish with heavy industries spiking 6.2 percent and chemical firms jumping 3.2 percent. Textiles fell 2.7 percent and telecom stocks shed 1.7 percent. (Yonhap News)