Korean shares will likely remain bearish this week as the political unrest in the Middle East will continue to drive up oil prices, adding more inflationary pressure on the economy, analysts said.
The benchmark Korea Composite Stock Price Index (KOSPI) closed at 1,963.43, down 2.5 percent or 49.71 points from a week earlier on massive selling by foreign investors, who dumped 600 billion won ($531 million) worth of shares in net last week.
Analysts warned foreign investors could continue to dump shares this week to slash their exposure to uncertainties created by the Middle East crisis.
“The situation in the Middle East is more likely to stabilize than worsen, and in that case, the KOSPI will attempt to make a rebound as it will remove pressure on the stock market,” said Lee Seung-woo, an analyst at Daewoo Securities Co.
Other analysts said the market will eventually stabilize after the Libyan crisis settles, but added investors should look for shares that will benefit from a sharp increase of international oil prices in the short term.
Meanwhile, U.S. stocks rose Friday on a technical rebound. The Dow Jones industrial average was up 61.95 points, or 0.51 percent, to 12,130.45. The tech-heavy Nasdaq Composite Index gained 43.15 points, or 1.58 percent, to 2,781.05.
