South Korean stocks are expected to gather ground next week, as the Bank of Korea (BOK)'s Thursday rate cut that kept step with the government stimulus will likely spark momentum in the market, analysts said Saturday.
The benchmark Korea Composite Stock Price Index (KOSPI) closed at 1,944.75 on Friday, down 1.07 percent from the previous week.
Poor Chinese manufacturing data released on Monday put downward pressure on the main index, dropping it to the early 1,960 level.
The KOSPI then stayed on the sidelines, hovering around 1,950 ahead of the BOK's April rate-setting meeting as well as the expiration of options and futures.
Toward the latter part of the week, the KOSPI went under a volatile move. Following the BOK's unexpected rate cut to 2.50 percent for the first time in four years, the index immediately buoyed to 1,980. But it plunged 34.70 points to 1,944 after the yen-dollar exchange rate breached the 100 yen mark, manifesting local exports' fear of an increasingly weakening yen.
Next week, however, the KOSPI will not likely be swayed any more by yen's depreciation as market experts predict that Japan's arbitrary currency devaluation will soon reach its limit and its aggressive monetary easing will not fully lend support to boosting corporate earnings.
"It takes time for most Japanese firms to make a significant turnaround or post better results, except automobiles that benefit from the cheaper currency straight away," said Han Chi-hwan, an analyst at KDB Securities Co.
On the back of the BOK's rate cut, the KOSPI may climb over the 2,000 mark, Han added.
Foreigners were net sellers of local equities this week, dumping a net 480 billion won (US$433.2 million), whereas retail investors and institutions snapped up a net 220 billion won and a net 330 billion won, respectively.
Builders were the biggest weekly gainers with 7.6 percent, followed by brokerage houses and non-metal stocks both at 3.8 percent and machineries with 3.3 percent. In contrast, utilities lost 5.5 percent, with auto and tech firms dipping 2.9 percent and 2.4 percent each. (Yonhap News)
