BUSINESS

Seoul stocks likely to remain subdued next week on global economic woes

By Yonhap
  • Published : Aug 17, 2019 - 11:14
  • Updated : Aug 17, 2019 - 11:14

South Korean shares are likely to remain subdued next week amid lingering concerns over a global economic slowdown prompted by the US-China trade row, analysts said Saturday.

The benchmark Korea Composite Stock Price Index closed at 1927.17 points on Friday, up 0.34 percent from a week ago. The index suffered a 3 percent decline last week.
 
(Yonhap)

Analysts said the market direction for next week will largely depend on developments in the US-China trade spat, although the latest moves from the world's two biggest economies suggested a bumpy road ahead.

The United States said Tuesday that the new 10 percent tariffs on some Chinese imports, such as video game consoles and certain footwear items, will be delayed until Dec. 15, but additional duties on other Chinese products will take effect next month as planned.

In response, Beijing said Thursday it will come up with retaliatory measures if Washington moves forward with plans to slap tariffs on Chinese imports.

Investors will also pay close tabs on the July US Federal Open Market Committee minutes to be released next week as they look for any clues for potential rate cuts. Fed chief Jerome Powell is expected to deliver his thoughts on recent economic situations at an annual central bank forum in Jackson Hole, Wyoming, on Thursday.

"Since uncertainties in the US-China trade war and concerns over a global economic slowdown got bigger, it will be important to see how the Fed will respond," Kim Yoo-mi, an analyst at Kiwoom Securities, said. "If the monetary easing stance from the Fed is confirmed, it can deliver a positive impact to the financial market."

This week, foreigners sold more than a net 322.8 billion won ($839 million) worth of local stocks, while institutions offloaded a net 197.6 billion won. Retail investors bought a net 447.9 billion won.

Tech and pharmaceutical stocks were among major gainers this week, while construction, insurance and financial firms lost ground.

Analysts said the local currency will continue to come under selling pressure next week.

On Tuesday, the Korean won closed at 1,222.20 against the US dollar, its lowest point since March 2, 2016, when the local currency closed at 1,227.5 won per greenback, though it made a slight recovery later. The Korean won closed at 1210.8 per dollar on Friday.

"Embers of the US-China trade war still remain," Kwon Ah-min, an analyst at NH Investment & Securities, said. "With rising concerns of economic slowdown, risk-avoiding sentiment is spreading among investors." (Yonhap)


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