South Korean shares are expected to suffer volatility this week as the eurozone fiscal debt problems will likely continue to weigh on investors sentiment, analysts said Saturday.
The KOSPI dropped 1.8 percent last week to close at 1,839.96 on Friday. The index fell below 1,820 at one point amid worsened market sentiment after credit ratings on European banks were downgraded.
Market watchers worry that sentiment could further freeze if credit ratings agencies lower sovereign ratings on European countries.
Fitch is reportedly reviewing credit ratings on six European countries, including Italy, Spain and Ireland. It earlier lowered the credit outlooks for France from stable to negative, though it affirmed its “AAA” rating.
Investors will pay close attention to how the eurozone debt crisis plays out next week, analysts said. News of a credit rating cut in Europe could rattle market sentiment here.
But as some of the eurozone factors have already been reflected in market sentiment, the impact would not be significant enough to cause severe volatility, analysts said.
“There are worries that sovereign credit ratings on European countries could be downgraded,”said Lee Seung-woo, an analyst at Daewoo Securities. “The impact would not be significant, however, given that the worries have already been reflected in the market to some extent.”
Some major indicators to be unveiled by the U.S. government, which includes its third-quarter economic growth, will also play a role in setting the tone for the market this week, analysts said.
(Yonhap News)
