Korean stocks are expected to move in a narrow range in this week, as foreign buying may turn lackluster and pressure from the latest gains is likely to slow down a further gain by the key index, analysts said Saturday.
The benchmark KOSPI closed on Friday at 1,972.34, up 0.38 percent, or 7.51 points, from one week ago.
Although foreign investors propped up the KOSPI earlier this week, the key index failed to surpass the 2,000 level likely to have cheered investors. The last time the KOSPI traded above 2,000 was in August, 2011.
Analysts anticipate that the benchmark index may hover above 2,000 this week, as the latest employment reports from the U.S. fan optimism about the recovery of the world’s largest economy.
The news that the U.S. added the largest number of jobs in nine months in January shot stocks higher. On Friday, the Dow Jones industrial average jumped 1.23 percent to a three-year finishing high and the tech-heavy Nasdaq composite Index rallied 1.61 percent to end at a 11-year high.
Analysts said the significant 2,000-level may not be sustained, as Thursday’s option expiration could unleash a massive amount of institutional selling and because foreign investors may decelerate stock buying.
“The KOSPI may lose steam in the short term as foreigners are forecast to scale back buying and institutional investors may cut back on local shares,” said Oh Jae-yeol, an analyst at IBK Investment Co.
Another analyst echoed the view that there is not much market momentum that could lead the KOSPI’s rise above 2,000.
“If we see a resolution to the Greek government bonds, the KOSPI may trade above 2,000,” said Lee Seung-woo, an analyst at Daewoo Securities. “But since there isn’t much market momentum and foreigners may proceed slowly on adding more stocks, the KOSPI is likely to trade in a narrow band.”
On Thursday, the Bank of Korea is set to hold a monetary policy committee meeting to determine this month’s key interest rates. The central bank is widely expected to keep the benchmark seven-day repo rate steady for the eighth month in February.
(Yonhap News)
