Seoul bourse likely to move in tight range

South Korean stocks are likely to be locked in range-bound trading this week as investors step to the sidelines over a lack of momentum, analysts said.

The benchmark Korea Composite Stock Price Index rose 0.55 percent from a week earlier to finish at 1,822.93 last week, with the market fluctuating most of the week.

The main index slumped 27.05 points to 1,794.91 on Wednesday as investor sentiment soured over U.S. Fed Chairman Ben Bernanke’s bleak economic outlook. But it bounced back to the psychological support level of 1,800 the following day, as signs of recovery in the U.S. housing market brought back investors.

Several key economic data are due this week, including the report of the second-quarter gross domestic product of the U.S. on Thursday and the HSBC Purchasing Managers Index of China’s manufacturing sector due on Tuesday. But they are not likely to serve as a momentum as the U.S. economy is expected to have grown more modestly than in the first quarter, while the PMI manufacturing index is expected to have declined, according to analysts.

The Bank of Korea will also release the country’s second-quarter GDP on Thursday, but the outlook is also far from bright, the analysts said. On July 13, the central bank sharply cut its 2012 economic growth outlook to 3 percent from 3.5 percent, citing a possible shrink in exports amid the protracted eurozone debt crisis.

“It will take some time before the stock market takes a certain direction,” said Lee Seung-woo, an analyst from KDB Daewoo Securities. “Short-term trading seems desirable while waiting for market movement.”

“It will be hard for the U.S. second-quarter GDP data to boost investor sentiment, but its negative influence on the market will be short-lived on the hope of quantitative easing,” said Kim Hyoung-ryoul, an analyst at Kyobo Securities Co.

Investors will be eyeing the meeting of the Federal Open Market Committee at the end of this month for possible economic stimulus policies, he added. 

(Yonhap News)