Seoul shares face correction this week

By Korea Herald
  • Published : Jul 20, 2014 - 21:21
  • Updated : Jul 20, 2014 - 21:21
The South Korean stock market is expected to come under selling pressure this week as uncertainties stemming from the crash of a Malaysian passenger jet weigh on investor sentiment, but hopes for market-friendly policies and economic recovery may curtail a sharp fall, analysts said Saturday.

The benchmark Korea Composite Stock Price Index finished at 2,019.42 points on Friday, up 1.2 percent from a week earlier.

Fueled by growing expectations of a rate cut and economic stimulus measures, the main index gathered ground through the week, reaching this year’s all-time high on Thursday.

New Finance Minister Choi Kyung-hwan reaffirmed that his ministry will seek various measures to help Asia’s fourth-largest economy grow, nudging the country’s central bank to join its move by trimming its policy rate currently staying at 2.5 percent.

The crash of a Malaysian passenger jet could have a negative impact on the market, forcing investors to offload part of their holdings, according to market watchers.

“The local stock market is expected to face correction on uncertainties over Ukraine,” said Park Seung-young, an analyst at KDB-Daewoo Securities. He expected the KOSPI to range from 1,950 points to 2,030 points this week.

The Malaysian jetliner crash may provide investors a chance to lock in gains, but its impact on the financial market would be short-lived, according to Kang Hyun-chul of Woori Investment & Securities.

A series of economic data coming out of China and South Korea may also set the overall tone for the local stock market.

This week, a slew of major firms such as POSCO and LG Display are set to report their second-quarter earnings.

The logistics and tech sectors were among the biggest gainers last week, each gaining some 3.5 percent and 3 percent. In contrast, non-ferrous metal was the biggest loser with a loss of some 8 percent. (Yonhap)