The South Korean stock market is likely to trade flat this week despite abated woes from Scotland and the U.S. Federal Reserve, due to lack of growth momentum compounded by Hyundai Motor’s plunge on the main bourse, analysts said.
The benchmark Korea Composite Stock Price Index climbed 0.58 percent from the previous week to close at 2,053.82 on Friday.
Seoul shares lost ground earlier last week on weak economic data from China, the country’s No. 1 trading partner. Beijing’s data showed the country’s industrial output gained 6.9 percent on-year in August, growing at the slowest pace since December 2008.
Sentiment ran cautious ahead of the two-day U.S. Federal Open Market Committee, where the Federal Reserve pledged to keep interest rates at the current near-zero level for a “considerable time,” removing speculation of an early rate hike.
The local stock market plunged Thursday when shares of Hyundai Motor and its affiliates jointly lost ground after the automotive group pledged 10.55 trillion won ($10.11 billion) to buy land from state power provider Korea Electric Power Corp.
The price, far above the appraised 3 trillion won, scared investors, raising worries about the group’s liquidity down the road.
The company has already been facing challenges from the weakening yen and falling competitiveness against rivals.
Analysts said Seoul shares are anticipated to trade almost flat next week due to the uncertainties from affiliates of Hyundai Motor Group.
“While shares are supposed to gain ground from abated woes from Scotland’s independence referendum, Hyundai’s move raised a risk for the stock market,” said Kim Sung-hwan, an analyst from Bookook Securities. “There is also no other clear growth momentum.”
“Accordingly, the KOSPI is likely to move in the 2,030-2,080 bracket,” Kim said, adding the market needs to take a wait-and-see stance on how foreign investors will react to Hyundai’s decision.
Weekly foreign selling came to 443.84 billion won, while individual investors purchased a net 160.5 billion won.
Institutions scooped up a net 333.5 billion won.
Builders and retailers were gainers this week by climbing 2.32 percent and 1.47 percent, respectively, and machineries also advanced 2.57 percent. Mobile carriers and financials shed 0.64 percent and 0.68 percent, respectively. (Yonhap)
