Oil rout to haunt Seoul stock market next week

South Korean stocks are expected to go wobbly next week as faltering oil prices would exacerbate prolonged concerns over the global economic downturn, analysts said.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 1,975.32 on Friday, down 2.3 percent from a week ago, marking the third straight week of declines.

The market started bearish this week following the sharp fall in oil prices the previous week that also battered the U.S. shares.

Investors, however, began picking up risky assets as uncertainties tied to the long-awaited interest rate hike in the U.S. were gone, sending the local stock market to rise for three consecutive sessions.

On Wednesday (U.S. time), the U.S. Fed, as widely expected, raised the target rate by a quarter point to 0.25-0.50 percent for the first time in nearly a decade. 

But the relief rally gave way to oil issues on Friday. After a brief rebound from last week's rout, U.S. crude and the global benchmark of Brent tumbled again to a multi-year low.

"Even after the FOMC meeting, foreign investors have continued their selling binge as they are still leery of possible fallout on emerging economies from the Fed decision," said Koh Seung-hee, an analyst at KDB Daewoo Securities Co.

Throughout the week, offshore investors were net sellers, dumping more than 1 trillion won (US$847 million) in shares.  

"Such a selling binge is forecast to continue for the time being, though bargain hunting and corporate dividend payouts would allure institutions," the researcher added.   

Other market-moving events that deserve investors' attention next week include the U.S. household spending for November, which is estimated to pick up 0.3 percent, and orders for durable goods that are forecast to shrink 0.7 percent, according to the researcher. (Yonhap)