South Korean stocks are expected to trade in negative terrain this week, weighed down by uncertainties arising from a prolonged political impasse in the United States, analysts said.
The benchmark Korea Composite Stock Price Index slid 0.74 percent last week from the previous week, closing at 1,996.98.
The main index moved in a tight range, putting shares directionless since Washington declared a partial halt to its government operations as of Oct. 1 after the Republicans and Democrats failed to compromise on a federal spending resolution.
The U.S. government shutdown didn‘t have a significant impact on the local bourse, as it was widely expected, and the KOSPI still attracted a firm foreign inflow despite such political risks abroad.
But analysts forecast such market confidence may start taking its toll next week as the U.S. government shutdown will likely drag on.
“It seems the Congress will drag the issue all the way until the debt-ceiling deadline, weighing down the KOSPI,” said Han Chi-hwan, an analyst at KDB Daewoo Securities Co.
The U.S. government shutdown will face an even greater rancor leading up to another partisan battle of raising its debt ceiling to avert a sovereign default.
The stalemate over the budget spending will likely be settled along with the debt-ceiling talk, Han added.
“Until then, we might see some foreign outflow, but that won’t change their views about Korea having sound fundamentals.”
This week, overseas investors snapped up a combined net 690 billion won ($644 million), with institutions buying about 480 billion won.
Tech and telecom companies were the biggest gainers, climbing nearly 3 percent each from a week earlier, while machineries and shipping lines were among those that were most bearish, slumping 5.4 percent and 4.5 percent, respectively. (Yonhap News)
