The South Korean stock market is anticipated to bounce back this week, snapping its two-session losing streak, on the government’s latest stimulus package that has whetted foreign investors’ appetite for local shares, analysts said Saturday.
The benchmark Korea Composite Stock Price Index climbed 1.92 percent from the previous week to close at 2,073.10 on Friday, extending its losing streak to a second session.
Earlier this week, Seoul shares traded bullish on the strength of better-than-expected gross domestic product growth and manufacturers’ data from China, which was enough to curb investors’ concerns over the geopolitical tensions in the Middle East and Ukraine.
On Tuesday, the KOSPI closed above the 2,060-point level for the first time in three years at 2,061.97. The index extended its rally Wednesday to set a new yearly-high record of 2,082.61. The KOSPI even passed the 2,090-point level at one point during Wednesday’s trading.
The rally slowed later in the week, as listed firms posted lackluster earnings for the second quarter, with Samsung Electronics posting a net profit of 6.25 trillion won ($6.06 billion), down 19.5 percent from a year earlier. Investors also cashed in recent gains, pulling down the index further.
Analysts, however, said Seoul shares are set to gain ground down the road, as the country’s economic stimulus plan will still induce foreigners to scoop up local shares.
The government said last month it has allocated 41 trillion won for an economic stimulus plan to bolster domestic consumption.
“South Korea’s economic stimulus move has improved foreign investors’ appetite for local shares,” said Jennifer Lee from KDB Daewoo Investment & Securities. “The Chinese stock market is also strongly gaining ground, which will beef up the influx of foreign capital to emerging nations.”
Weekly foreign buying came to 5.41 trillion won, while individual investors offloaded a net 1.27 trillion won.
Institutions scooped up a net 3.5 trillion won. Banks, utilities, and mobile carriers were major gainers this week, adding 17.4 percent, 11.3 percent and 11.1 percent, respectively. Machineries and medical firms, in contrast, shed 3.4 percent and 2.9 percent. (Yonhap)
