SEOUL– South Korean stocks are likely to skid under selling pressure next week, as investors could take to the sidelines over concerns about an earlier-than-expected U.S. rate hike ahead of the Jackson Hole gathering, analysts said Saturday.
The benchmark Korea Composite Stock Price Index (KOSPI) closed at 3,060.51 points Friday, down 3.49 percent from a week ago, and the lowest closing since March 29.
The KOSPI retreated every session since Aug. 5, except a one-day breather on Wednesday.
The loss came amid strong foreign sell-offs that mainly stemmed from tech plunge, virus resurgence and the tapering jitters by the U.S. Federal Reserve.
The Fed’s latest minutes hinted at the possibility that the Fed could begin tapering its accommodative policies as early as the fourth quarter of this year, dragging down the value of the local currency against the U.S. greenback.
Investor sentiment also weakened on a gloomy forecast about declines in chip prices and the spiking new coronavirus cases that came just shy of a record high on Thursday.
Foreigners net sold a combined 1.2 trillion won (US$1 billion) on the main bourse this week, while retail investors bought 1.53 trillion won. Institutions offloaded a net 63 billion won.
Analysts expected that the KOSPI’s downslide may continue next week as investors’ worries about an early tapering and rate hike continue to play in the market.
Investors are seeking clues about the tapering timeline from the Fed Chairman’s address, set to be delivered Friday, U.S. time, at the Jackson Hole gathering.
Some key survey-based economic indicators, including U.S. market purchase managers’ index and European consumer sentiment index for August, are to be released next week. These indicators are expected to slow from the previous month, according to market consensus.
“Considering the tapering worries, weak economic indicators may lessen the chances of a dramatic adjustment of stock prices,” NH Investment & Securities analyst Kim Young-hwan said.
“After the August indexes are published, the KOSPI is expected to fluctuate until the Jackson Hole meeting results are revealed,” he added.
Next week, August market purchase managers’ index will be released in U.S. and Eurozone on Monday in Korea time.
Bank of Korea will hold its monetary meeting and the U.S. second-quarter gross domestic product will be published Thursday.
Federal Reserve chief will address at the U.S. Jackson Hole gathering Friday night in Korea time.
Source: Yohnap News Agency