Published : 2013-12-08 18:40
Updated : 2013-12-08 18:40
The South Korean stock market is expected to trade higher this week on eased concerns over an early tapering of the U.S. Federal Reserve’s quantitative easing, analysts said.
The benchmark Korea Composite Stock Price Index fell 2.9 percent last week to close at 1,980.41.
Investors continued to take a wait-and-see approach ahead of U.S. non-farm job data coming out after Friday’s trading session, which would give investors a better glimpse of when the Federal Reserve will commence tapering of its quantitative easing.
“This month’s Federal Open Market Committee meeting, however, is unlikely to come up with a tapering of its economic stimulus, as latest improvements in U.S. data are not sufficient enough to say the country is in a full-fledged recovery trend,” said Han Chi-hwan, a researcher at KDB Daewoo Securities Co.
“As Washington’s debt-ceiling issue still prevails, the FOMC is expected to take a more cautious approach toward reducing stimulus moves,” Han added. “Concerns over a tapering of quantitative easing will be eased throughout this week.”
Earlier last week, Seoul shares traded lower after Thanksgiving and Black Friday sales showed weaker-than-expected consumer sentiment in the world’s largest economy.
The local stock market continued to lose ground as November factory activity survey and October construction spending in the U.S. revived speculation that the U.S. Federal Reserve may soon scale back its stimulus measures.
The U.S. Institute for Supply Management index, a key barometer of the country’s manufacturing activity, came to 57.3 in November, hovering far above the market expectation of 55.
Weekly foreign selling came to 690 billion won ($651.2 million), and institutions also offloaded a net 180 billion won. In contrast, individuals bought a net 976 billion won.
Shares lost ground across the board this week, with machineries and carmakers decreasing 5 percent. Logistics firms and technology companies also fell 4.7 percent and 3 percent, respectively. (Yonhap News)