Seoul shares likely to extend gains next week on eased Brexit woes

Published : Jul 2, 2016 - 10:18 Updated : Jul 3, 2016 - 09:15

Korean shares are likely to trade in the positive terrain next week as shock over Britain‘s decision last week to exit the European Union has eased, analysts said Saturday.

The benchmark Korea Composite Stock Price Index gained 3.19 percent for the whole of this week to end at 1,987.32 this Friday, fully recovering the loss of 3.09 percent last Friday when Britain’s EU exit vote wiped out nearly 2.5 trillion won from global equity values.

Next week, analysts said the KOSPI will trade in the range of 1,950 to 2,020 as uncertainties surrounding Britain‘s decision to leave the EU will be eased further amid expectations that central banks worldwide will meet this month and come up with coordinated intervention measures to soothe volatility.

“The central banks’ meeting is expected to prevent any sharp plunge in global stock markets. Investor sentiment looks set to remain positive towards concerted global efforts to contain market volatility next week,” Kim Ye-eun, an analyst at LIG Investment & Securities, said.

Mirae Asset Daewoo analyst Ko Seung-hee said the market could get a boost from improved earnings results, available on Thursday, by major exporters such as Samsung Electronics Co.

Samsung Electronics is forecast to report stronger earnings results in the June quarter compared to a year earlier. A market consensus showed the electronic giant will report an operating profit of 7.3 trillion won on sales of 50.9 trillion won. They are up from 6.9 trillion won and 48.5 trillion won a year earlier.

Early this week, the European Central Bank and the Bank of Japan said they are prepared to inject more funds into markets.

South Korea also announced a 20-trillion-won fiscal stimulus package to ease volatility and support growth.

Investors will closely watch U.S. job data due next week as they could take a cue from the figures in their investment directions, analysts said.

Robust employment data would cement investors‘ expectations that the U.S. Federal Reserve won’t raise its key rate this year.

It could reignite investors‘ risk-on appetite, boosting emerging-market stocks, they said.

But they cautioned that a certain amount of uncertainties will remain for the time being in markets as it will take more than two years for Britain to exit the 28-nation, single biggest economic bloc. (Yonhap)