Seoul shares expected to trade higher despite budget cuts in U.S.

South Korean stocks are expected to trade higher next week despite automatic spending cuts in the United States, analysts said Saturday.

The benchmark Korea Composite Stock Price Index (KOSPI) closed up 0.1 percent to 2,026.49 on Friday from the previous week.

The KOSPI rebounded later this week as Ben Bernanke, the chairman of the U.S. Federal Reserve, made comments that suggested a continuation of the monetary easing policy.

Weekly foreign net-buying totaled 70 billion won (US$64 million), while institutions scooped up 404 billion won worth of shares. Meanwhile, institutions and retail investors offloaded shares worth 330 billion won and 30 billion won, respectively.

Analysts said the KOSPI is expected to see an upward trend next week as across-the-board budget cuts in the U.S. known as the "sequester" were already expected and the scope of the cuts was reduced.

U.S. President Barack Obama vowed Friday that he would continue working with Congress in the coming weeks to find a compromise on a balanced approach to replace the harmful budget cuts, according to the White House.

Lee Seung-woo, an analyst at KDB Daewoo Securities Co., said South Korean stocks are likely to get off to a smooth start and see an upward trend next week as local shares showed signs of moving in sync again with the global stock markets. (Yonhap News)