BUSINESS

Seoul shares forecast to take breather next week

By 신현희
  • Published : Sept 3, 2016 - 13:51
  • Updated : Sept 3, 2016 - 13:51

South Korean stocks are expected to stay in a tight range next week, as traders will have to digest a set of fresh data which will provide clues for a rate hike in the United States, market observers said Saturday.

In particular, foreigners will likely slow their buying of local shares, they added.

This week, the benchmark Korea Composite Stock Price Index edged up 0.04 percent to close at 2,038.31.

The KOSPI's rise was limited by a series of "hawkish" remarks by Fed leaders following the Jackson Hole meeting, in which Janet Yellen, the head of the Federal Reserve, said, "The case for an increase in the federal funds rate has strengthened in recent months."

A drop in global oil prices also weighed down on investors' sentiment.

Foreigners purchased a net 229.6 billion won ($205.4 million) worth of stocks here, while individuals and institutions sold a net 123.4 billion won and 75.5 billion won worth of shares.

"The intensity of foreigners' buying is expected to weaken amid concern over the U.S. rate hike," Mirae Asset Daewoo Co., a local brokerage firm, said in a weekly report. "As a result, the domestic stock market is forecast to take a breather, with the KOSPI standing between 2,000 points and 2,060 points."

Traders will also await the results of the Bank of Korea's monthly monetary policy meeting, slated for Friday, although many expect it to freeze the rate at a record low of 1.25 percent.

"As the possibility of the U.S. rate hike grows, the BOK's seems to have limited room," Lee Chang-sun, a senior researcher at the LG Economic Research Institute, said.

The European Central Bank is also scheduled to hold a policy session on Thursday, with chances low as well that it will roll out additional easing measures. On the same day, China will issue its trade data for August. (Yonhap)