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Shares may trade in tight range this week

March 17, 2013 - 20:49 By Korea Herald
The South Korean stock market may trade in a narrow range this week, affected by a U.S. rate decision and overseas economic data, but it is not likely to face steep falls on global recovery hopes, analysts said.

The benchmark Korea Composite Stock Price Index finished at 1,986.50 last week, down 0.97 percent from a week earlier.

The KOSPI was weighed down this week by heightened geopolitical risks from North Korea’s nuclear threats and the yen’s weakness, decoupling from the bullish gain in the U.S. market.

Analysts said that the Seoul equity market is likely to be swayed by global economic issues such as a U.S. rate-setting meeting and a set of economic data in China and the eurozone.

The U.S. Federal Reserve is scheduled to hold its two-day rate-setting session on Tuesday and Wednesday amid market players’ keen interest in how long the central bank will continue its quantitative easing moves. Fed Chairman Ben Bernanke has said that the easing cycle will be maintained, but the Feb minutes in January showed that there is some division over when to begin to roll back the QE steps.

Haruhiko Kuroda, the new governor at the Bank of Japan, will take office on Wednesday with pledges to tackle decades of deflation. Japan’s powerful monetary easing is putting downward pressure on the yen.

“The won may weaken to trade at the 1,100 level to the greenback this week, which would support shares of Seoul exporters,” said Lee Seung-woo, an analyst at KDB Daewoo Securities Co.

The Korean currency depreciated 1.8 percent to the greenback last week, compared with the previous week. Reversing its previous ascending trend, the won fell an average of 2 percent against the dollar on-month in February. (Yonhap News)