BUSINESS

Seoul shares likely to drift in cautious mode amid uncertainties

By Yonhap
  • Published : Aug 18, 2018 - 11:02
  • Updated : Aug 18, 2018 - 11:02
South Korean stocks may move in a tight range as investors are likely take a cautious approach due to lingering risks over various global issues, analysts said Saturday.

The benchmark Korea Composite Stock Price Index closed at 2,247.05 on Friday, losing 1.57 percent, or 35.74 points, from a week ago.

(Yonhap)
In the beginning of the week, a collapse of the Turkish lira sent a shockwave throughout the world. The Turkish currency had been on a sharp decline since the beginning of this year, but the pace accelerated when US President Donald Trump slapped stiff tariffs on Turkish steel. The measure was apparently in response to Ankara's decision to extend the detention of Andrew Brunson, an American pastor accused of espionage.

On Monday alone, the KOSPI tumbled 34.34 points, or 1.50 percent, reaching its lowest daily close -- 2,248.45 points -- since May 4 last year.

The next day -- the day before the Liberation Day closure -- it rebounded to gain 0.47 percent.

But foreigners dumped a net 242 billion won ($215.1 million) worth of local shares on Thursday, pushing the KOSPI down by nearly 1 percent to a 15-month low of 2,240.80 points.

The index increased 0.28 percent on the last trading day of the week on news that the United States and China will resume trade talks later this month.

"Turkish financial woes rocked the world this week, but the impact is expected to diminish gradually in coming days, along with eased Washington-Beijing trade disputes," Lee Kyoung-min from Daishin Securities Co said.

"Uncertainties that have dragged the KOSPI down will likely subside next week. It may stay over the 2,200-point level."

But he noted that it is too early to place any bets because Turkey and other emerging economies are still so weak that a small event could easily become a financial risk affecting wider markets.

"The global financial market's immunity levels have fallen widely and there are alarming data that the global economy is slowing down," said Lee. "Investors should reduce risky assets and increase safer ones."

Next week, the annual US Fed meeting at Jackson Hole, Wyoming, will take place starting Thursday. The country's housing transactions data for July will be released on the same day. (Yonhap)


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