South Korean stocks are expected to continue their climb this week as the country’s stock market is still deemed undervalued compared with other Asian markets, but gains may be capped by lingering fears of a falling Japanese yen, analysts said Saturday.
The country’s key stock index, the KOSPI, closed at 2,002.28 on Friday, up 0.6 percent from a week earlier.
“The KOSPI may get a boost from foreign buying, as the local stock market is still undervalued compared with its Asian peers,” said Han Chi-hwan, an analyst at KDB Daewoo Securities Co.
Concerns over a weakening Japanese yen and a liquidity crunch in the Chinese capital market weighed down the local bourse this week, he said.
The main index hovered around the psychologically-important 2,000-point level this week. Early this week, the KOSPI briefly surpassed the threshold on eased jitters surrounding the U.S. monetary policy but pared its earlier gain, caving in to heavy selling by retail investors unloading high-dividend shares as the year draws to a close.
Analysts predict investors will move on and opt to increase risky bets, but the gains may be limited by the yen’s weakness, exerting downward pressure on shares of automakers, the industry most affected by won-yen volatility.
Han forecast the KOSPI to move in a range of between 1,950 and 2,010.
Foreigners were net buyers of local equities this week, although the amount was small at a combined net 14 billion won.
Institutions snapped up a net 1.2 trillion won as they scooped up shares in a bid to make their portfolios look better ahead of the end of the year.
Retail investors offloaded a net 1.2 trillion won. Logistics and insurers were among the biggest gainers, climbing 5.5 percent and 2.2 percent. In contrast, telecom and tech shares lost 1.9 percent and 0.7 percent, respectively.
