South Korean shares are expected to gain some ground this week as the international community moves to resolve the eurozone crisis, analysts said Saturday.
The forecast comes as the benchmark KOSPI closed at 1,835.40 on Friday, up 75.63 points, or 4.3 percent, from a week earlier. The index had risen throughout the week after Germany and France, the main economic powers in Europe, said they are speeding up efforts to create a “firewall” to prevent fallouts in some countries from affecting the entire European banking sector.
Such moves have helped raise market confidence and alleviate concerns following the credit downgrade of Italy and Spain. They also helped relieve growing worries over double-dip recessions in major economies around the world.
Market watchers said they are keeping watch on developments leading up to the European summit meeting planned for Oct. 23.
European leaders are expected to come up an understanding on how best to cope with and contain the fiscal crisis.
A joint communiqu on the eurozone crisis and other issues that is expected to emerge from the Group of 20 finance ministers’ meeting later in the day should help buoy the market.
The G20 is engaged in a two-day meeting in Paris to discuss ways to tackle the latest global financial crisis ahead of the Nov. 3-4 summit.
Local experts, however, cautioned that any gains on the bourse this week will be limited in scale.
“Gains in the index will be limited until the end of the month,” said Park Seung-jin, an analyst at Samsung Securities Co., indicating that the market may experience ups and downs until some kind of resolution is made on how leading countries will tackle the eurozone crisis.
He said that investors may shed holdings to take advantage of the gains in stock prices, which would affect the KOSPI.
Others such as Choi Yong-ho, an analyst at Woori Investment and Securities Co., said investors should keep close tabs on third-quarter earnings reports that are due this month.
He added investors should monitor share prices of semiconductors, autos and auto parts, which may do well in the coming months.
