Seoul shares expected to continue rise on foreign buying

By Seo Jee-yeon
  • Published : May 25, 2014 - 20:47
  • Updated : May 25, 2014 - 20:47
The South Korean stock market is likely to gather ground this week, helped by overseas investors, analysts said Saturday.

The benchmark Korea Composite Stock Price Index gained 0.17 percent from the previous week to close at 2,017.17 on Friday, the highest of this year, supported mainly by eased concern over the Chinese economy.

South Korean stocks closed almost flat Monday on concerns over the won’s rise against the greenback, which could inflict foreign-exchange losses on exporters.

Seoul shares continued to trade lower as investors took a wait-and-see approach to the Federal Open Market Committee’s April minutes.

The market gathered ground Thursday when the U.S. central bank indicated it would continue its stimulus and has no plans to raise interest rates in the near future. China‘s improved manufacturing figures also boosted investor sentiment.

The KOSPI surpassed 2,020 points during intra-day trading Thursday for the first time in over five months.

Weekly foreign buying came to a net 1.04 trillion won ($1.02 billion), while individuals sold a net 460 billion won. Institutional investors offloaded a net 563 billion won.

Analysts said the KOSPI is anticipated to stay above the 2,000 mark, helped by gains in cyclical shares such as steelmakers, shipbuilders and chemical companies.

Cyclical industries refer to sectors whose performance depends heavily on economic fluctuations in comparison with those like pharmaceuticals and foods that make relatively steady earnings, despite external swings.

“Except for Thailand, which is currently suffering from political risks, foreigners are continuing their net purchase in the emerging markets,” said Jennifer Lee, an analyst from KDB Daewoo Securities, adding that abated woes from the Chinese economy will also lend support to optimism.

Banks and steelmakers edged up 2.4 percent and 1.4 percent, respectively, last week, while builders moved down 1.7 percent. (Yonhap)