The South Korean stock market is likely to see a gradual gain next week as investor sentiment improves after the central bank’s rate cut, analysts said Saturday.
The country’s key stock market index KOSPI closed 1.35 percent lower than a week ago at 1,985.79 on Friday. Seoul shares were able to pare some of its earlier losses this week after the Bank of Korea unexpectedly decided to cut the key rate to a record-low of 1.75 percent on Thursday.
Analysts said the effect of the BOK’s surprise rate cut will linger for the time being, but the KOSPI may fluctuate early in the week ahead of the U.S. Federal Open Market Committee meeting.
“Especially during the earlier part of next week, concerns about the FOMC meeting will pose a burden on the stock market,” said Ko Seung-hee, an analyst at KDB Daewoo Securities.
Market watchers expect the two-day FOMC meeting, slated from Wednesday, to give some clues on the U.S. monetary policy direction and ease market uncertainties.
The better-than-expected jobs data for last month from the U.S. Department of Labor had fueled speculation that the Fed would push up the timing of its rate hike, perhaps as early as June.
“After the FOMC meeting, the effects of the central bank’s rate cut, in addition to the likelihood of the slowed strengthening of the U.S. dollar against the local currency, are forecast to help the KOSPI bounce back up,” Ko said.
Foreign investors scooped up a net 89.62 billion won ($79.44 million) this week, with retail investors also buying a net 746.55 billion won. Institutions shed 881.48 billion won.
Medical and tech shares were gainers, while securities, utilities and machinery-related shares lost ground. (Yonhap)
