The Korea Herald

피터빈트

Seoul shares to trade in tight range next week

By 최희석

Published : Jan. 12, 2013 - 12:14

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South Korea's stock market is expected to trade in a tight range next week with economic indicators from China and the currency exchange being among the major factors that will determine its direction, analysts said Saturday.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 1,996.67 this week, down 0.75 percent from a week earlier after undergoing choppy trading.

The local currency's ascent against the dollar and the weakening yen of Japan could weigh on the market amid worries that a strong won could hurt the country's exports, one of its major growth engines.

The South Korean won soared to a 17-month high against the dollar on Friday as rate freezes by central banks here and abroad prompted a weaker greenback.

The yen's movement is another cause for concern for many Korean companies as they have to compete with Japanese businesses, which could hold better price competitiveness thanks to the Japanese currency's depreciation.

Investors are closely watching what the Bank of Japan will do about its inflation target as some expect the central bank to raise the target from 1 percent to 2 percent, a move that could result in more liquidity and cause the yen to depreciate further.

Economic data from China, however, could help turn the market sentiment around amid high expectations that the Chinese economy fared well in the fourth quarter. The optimism was bolstered after Beijing recently announced better-than-expected trade figures.

"The market stands at an important point in the short term," said Lee Seung-woo, an analyst at KDB Daewoo Securities. "Sentiment could get better once the market manages to rebound, but it could quickly go sour if stocks keep this week's sluggish trend." (Yonhap News)