The South Korean stock market is likely face more pressure this week as investors try to assess the market conditions after global markets reacted to a a slew of international events including the uncertainties in Ukraine and hints from the U.S. Fed of a rate hike.
The benchmark Korea Composite Stock Price Index (KOSPI) finished at 1,934.94 this week, a 0.02 percent dip from a week earlier following some volatile trading.
The main bourse, though managing to shrug off geopolitical uncertainties coming out of Ukraine, did take a beating after U.S. Federal Reserve Chair Janet Yellen hinted that interest rates could go up in the spring of 2015.
It recovered losses on better-than-expected U.S. economic data on Friday, yet uncertainties still remain, and that can hamper any serious gains in the near future, market watchers said.
Foreigners were net sellers of local equities this week, offloading 650 billion won worth of shares. Institutions snapped up a net 390 billion won in stocks, with retail investors adding 180 billion won more than they sold.
Construction firms and chemicals were among the biggest losers this week, losing 1.3 percent and 1.1 percent, respectively. In contrast, electricity and gas companies and steelmakers gained 2.0 percent and 1.8 percent, respectively, during the week.
For next week, market watchers predicted more volatility, with the Fed minutes to be made public along with data on the U.S. housing market and consumer sentiment.
“The overall pressures put on the market since the fourth quarter of 2013 are still present, especially since both the United States and China are taking steps to curb their respective stimulus programs,” said Kang Hyun-gie, an analyst at I‘M Securities & Investment Co.
He said that under such circumstances it may be hard for the KOSPI to rise above the 1,950 level, even if stock prices manage to gain some momentum.
The market watcher said that depending on development, the bourse could even dip below the 1,900 mark.
Others like Han Beom-ho, an analyst at Shinhan Investment Corp., expected the bourse to move between the 1,910 and 1,950 range, with investors likely to scrutinize economic data for the first quarter.
“As the end of the month approaches, investors will start checking data in more detail that can provide some indication on true market conditions,” he said.
He said such moves can affect the market if investors think economic growth has not met expectations.