South Korean shares are expected to move in a tight range this week as fiscal debt problems in Europe and the U.S. will continue to weigh on investor sentiment, analysts said.
The benchmark KOSPI closed at 1,776.40, down 3.3 percent last week, marking the fourth consecutive week the index has declined.
The index earlier gained ground despite the U.S. Congressional committee’s failure to identify ways to cut the budget deficit as Moody’s Investors Service said it will not downgrade the U.S. sovereign credit rating.
The KOSPI quickly fell below the 1,800 mark following a report that the growth of the U.S. gross domestic product in the third quarter was revised from an earlier estimate of 2.5 percent to 2 percent. Investor sentiment lost further ground following reports of a possible downgrade of the credit ratings of Portugal and Hungary.
Foreign investors sold a net 1.45 trillion won ($1.24 billion) worth of stocks here last week with institutional investors also selling a net 570 billion won worth of stocks. Individuals purchased shares worth 820 billion won in net value.
The direction of local shares this week will largely depend on conditions in the U.S. and Europe, analysts said.
“Small technical gains may be possible, but conditions are still too uncertain for aggressive investment,” said Lee Seung-woo, an analyst at Daewoo Securities Co. “Investors are advised to aim for small, short-term gains.”
(Yonhap News)
