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Seoul stocks expected to gain slightly on bluechips next week

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Published : 2014-06-07 11:10
Updated : 2014-06-07 11:10

South Korean stocks may move marginally upward next week, fueled by gains in bluechips from an inflow of foreign funds, analysts said Saturday.

The benchmark Korea Composite Stock Price Index (KOSPI) finished at 1,995.48 this week, edging up 0.03 percent from a week earlier.

The small rise can be attributable to data that indicated the global economy is on the mend, albeit slowly, and net buying of bluechip stocks by foreign investors. 

Foreigners, who exert considerable influence on the market, remained net buyers of South Korean shares for 18 straight sessions as of Thursday.

The country's bourse was closed on Wednesday for local elections and again on Friday in observance of Memorial Day.

For next week, market watchers predicted the bourse may rise, although gains may be centered on big-name companies that have been getting most of the attention from foreign investors.

"The stimulus program announced by the European Central Bank's (ECB) policy meeting, which concentrated on monetary policy initiatives without touching on more assertive quantitative easing measures, will likely permit foreign funds, particularly from Europe, to continue entering the local stock market," said Jennifer Lee, an analyst at KDB Daewoo Securities.

The ECB meeting was held late Thursday (Korea time) after the market closed. The bank cut its benchmark rate to 0.15 percent from 0.25 percent and took an unprecedented move of lowering the overnight bank deposit rate to minus 0.1 percent from zero.

Lee, however, said that inflow of funds into the market may decline overall, which could restrict gains.

Others said the measures taken by the European policymakers have already been reflected and may not play a major role.

"Since most of the ECB's stimulus program was 'known' ahead of time, its impact on the market may be limited," said Kang Hyun-gie, an analyst at I'M Securities & Investment Co.

He anticipated that the market may actually become more volatile next week, with any changes resulting in the bourse losing ground instead of advancing.

The expert said besides new developments out of Europe, investors will keep tabs on trade and current account figures for both China and Japan that will be out in the next few days.

(Yonhap)

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