South Korean shares are likely to face high volatility in the coming week, with key political developments, including the US presidential election and new coronavirus outbreaks, expected to roil global financial markets, analysts said Saturday.
The benchmark Korea Composite Stock Price Index (KOSPI) closed at 2,267.15 points on Friday, down 3.97 percent from a week ago.
Local analysts said the KOSPI could receive an upward push in the coming week from hopes for third-quarter earnings hikes and hunting for year-end dividends. Such positive factors, however, could be offset by uncertainties from the US presidential election on Tuesday (US time) and both houses of Congress, they noted.
"The stock market will pay strong attention to the US presidential election and the COVID-19 situation (in the US and Europe)," NH Investment & Securities analyst Noh Dong-kil said.
"With the US stimulus talks having gone slow, investors are now crossing their fingers for the FOMC to roll out some additional policies," he added.
In the past few months, the Federal Reserve and its chairman Jerome Powell have repeatedly signaled that the pandemic-hit economy requires additional support.
The US Federal Open Market Committee will begin its next meeting Wednesday after the presidential election and announce the results on Thursday.
Local investors have been attentive to the US presidential candidates' differences on the environment, taxation and antitrust issues. Among them, antitrust discussions have caught the most attention, financial experts said.
"Despite some concerns the candidates' focus on the antitrust law (and its influence on the South Korean IT exporters), its influence over stock prices likely will be short-lived," KTB Investment & Securities analyst Kim Jong-hyun said.
"Rather, it is more likely that the growing demand for 5G infrastructure and untact technology would increase private investment," he added.
South Korea's October import-export data will be posted on Sunday.
China's Caixin manufacturing Purchasing Managers Index (PMI) and US Institute for Supply and Management (ISM) manufacturing index will be published on Monday (Korea time). (Yonhap)