SEOUL: The South Korean stock market is expected to trade in a tight range next week as investors take a wait-and-see approach ahead of the U.S. Federal Reserve’s rate-setting meeting, analysts said Saturday.
The local bourse traded lower this week, with the benchmark Korea Composite Stock Price Index (KOSPI) closing at 2,052.17 on Friday, down 0.77 percent from a week earlier.
Seoul shares managed to trade higher only on Thursday as the Bank of Korea slashed its policy rate to a record low of 1.5 percent in order to help boost slackened domestic demand hit by the MERS outbreak.
The rate cut’s impact, however, did not last long, as the KOSPI dropped 0.22 percent on Friday amid gloomy outlooks on Greece’s chance for a bailout deal.
Next week, investors are forecast to sit on the sidelines ahead of the Federal Open Market Committee (FOMC) meeting slated for Thursday, analysts said.
“(We) forecast that the U.S. could go ahead with a rate hike in September, and Federal Reserve Chair Janet Yellen is highly likely to actively communicate with the market in regards to normalizing monetary policy during her press conference after the FOMC meeting,” said Ko Seung-hee, an analyst at KDB Daewoo Securities Co. Also on the agenda next week is a hike in the daily stock price limit to 30 percent from the current 15 percent.
“The bourse operator will be strengthening its tools to restrict market fluctuations, so the price limit expansion will not cause a rise in sudden changes in the overall stock market,” Ko said.
Foreign investors dumped a net 664.83 billion won (US$595.35 million) this week, while retail investors scooped up a net 984.81 billion won. Institutions offloaded a net 378.43 billion won. Non-metallic mineral producers, banks, and mobile carriers were among the major gainers this week, while fabric makers, tech firms and logistics companies lost ground.
