Seoul shares looking to economic indicators, North Korea factor

Korea’s stock markets are likely to seek positive signs from the latest economic indicators this week, but the possible upside might be limited if the country’s geopolitical risks resurface during the nuclear summit, which starts its two-day run Monday.

The benchmark KOSPI closed down 0.7 percent last week to 2,026.83, while the tech-packed KOSPI went down 2.3 percent to 527.47.

Analysts expect that Korea’s leading economic indicators, set to be announced on Friday, will continue to rise for the second month in a row. As long as export volume in March remains at a similar level compared with the year-earlier period, the country’s trade balance is forecast to be a surplus of $1.5 billion.

Later this week, the eurozone countries are expected to make a decision on additional bailout funds, which might be around 700-800 billion euros.

If the economic data and the fiscal debt crisis in Europe show optimistic signs, KOSPI will attempt an upturn, but analysts warned that high oil prices might put a damper on investor sentiment.

The 2012 Seoul Nuclear Security Summit is also a potential factor that might affect the local stock market as the large-scale event involving the world’s top leaders might renew concerns about the geopolitical dangers facing the nation.

“The stock market will test the ground at a 2,000 point level to see whether it can move higher in the short term,” said Lee Seung-woo, an analyst at Daewoo Securities.

Many Korean firms are set to wrap up their books on March 31 for the first quarter. Although specific earnings data for the January-March period might be absent until next week or later, investors are likely to respond to any earnings-related news about individual stocks.

The Korean won finished at 1,135.3 won to the greenback on Friday, down 5.9 won from Thursday’s close.

By Yang Sung-jin (insight@heraldcorp.com)