Seoul shares expected to move within narrow range

South Korean stocks are expected to move in a narrow range next week as investors wait to assess the impact of the trade suspension of Portugal’s largest banking group and upcoming key events, analysts said Saturday.

The benchmark Korea Composite Stock Price Index ended at 1,988.74 on Friday, falling 20.92 points, or 1.04 percent, from the previous week.

The index started weaker in the beginning of the week ahead of Samsung Electronics’ earnings estimate released on Tuesday.

Despite Samsung’s bigger-than-expected plunge in its second-quarter earnings, the local equity market successfully managed to stay above the psychologically important 2,000-point line.

Hit hard by short demand and the stronger won, the tech giant’s lackluster performance was foreseen and reflected in the market prices.

However, bad news from Europe on the last trading day of the week dragged the index down by nearly 15 points. The trade suspension of Portugal’s Banco Espirito Santo sparked concerns that the eurozone would suffer another debt crisis.

Analysts said that the Portuguese risk will be on the top watch list of investors, who want to monitor whether the problem becomes a regional issue.

“The issue will continue to affect the South Korean market next week, so the focus is on how the problem progresses,” Lim Dong-rak, a senior researcher from Hanyang Securities Co., said.

Fed Chairwoman Janet Yellen’s testimony on U.S. monetary policy before a Senate committee on Tuesday (local time) is one of the most important events next week.

“If Yellen expresses optimism about the U.S. economy and hints at a rate hike, the global markets will tumble fundamentally,” said analyst Park Seung-young from KDB Daewoo Securities Co.

Higher U.S. bond yields will cause investors to pull out from emerging markets, he said.

Corporate earnings reports will be another mover next week, with those of KT&G Corp., the country’s largest tobacco manufacturer, and top chemical firm LG Chem slated for Thursday and Friday, respectively.

“Investors have lowered their expectations on the earnings season. If these companies come up with better-than-expected results, that will work ... (to create) positive momentum in the market,” said Park. (Yonhap)