Seoul shares to track reaction to Obama's jobs speech next week

Amid an absence of major events next week, the South Korean stock market is expected to be largely influenced by the political reactions following U.S. President Barack Obama's jobs proposal, analysts said Saturday.

The benchmark Korea Composite Stock Price Index (KOSPI) wrapped up this week at 1,812.93, down 1.7 percent from the previous week.

The KOSPI got off to a weak start due to renewed worries of a U.S. economic recession and risks of a credit crunch in the eurozone. News on "zero" job growth in the U.S. in August and rocky talks on Greece's financial support program further weighed down investor sentiment.

The KOSPI climbed ahead of Obama's Thursday address on hopes his economic stimulus plan would invigorate the flagging U.S. economy. However, the index again retreated on worries the US$447 billion proposal would likely encounter political roadblocks.

Analysts said the Republicans' reaction to the proposal is likely to determine the local stock market's direction next week.

An upcoming talk on Greece's bailout fund and a meeting among European Union finance ministers, both scheduled for the week, are also factors to keep tabs on, they said.

"The stock market is likely to give investors chances to snap up shares. Investors are recommended to decrease their holdings when the index nears the 1,900-level and search for opportunities when it falls below the 1,800-mark," said Lee Seung-woo, an analyst at Daewoo Securities Co.

South Korean financial markets will be closed on Monday and Tuesday for the Chuseok holiday.

(Yonhap)