South Korean stocks are expected to build further gains as the United States and China reached a partial deal to end their trade war and as the Bank of Korea's rate decision comes under focus.
On Friday (Washington time), US president Donald Trump unveiled the first phase of a deal with China to end their yearlong trade row that has roiled the global financial market and suspended a planned tariff hike.
The benchmark Korea Composite Stock Price Index closed at 2,044.61 Friday, up 1.2 percent from 2,020.69 a week earlier.
South Korea's stock market has wobbled in the wake of the prolonged American-Sino trade dispute.
South Korea's exports have dipped for 10 consecutive months since December amid the prolonged trade dispute between the world's largest economies -- the largest importers of South Korean products.
Also, investors will await the BOK's rate decision this week, with many expecting at least a quarter percentage point cut to 1.25 percent, given sluggish exports and continuing weak domestic consumption.
Such an outlook comes after BOK Gov. Lee Ju-yeol noted, "It may not be easy to meet the 2.2 percent growth target (this year)," before a parliamentary finance committee last week.
The central bank slashed the base rate by 25 basis points to 1.5 percent in July, its first rate cut in three years, citing slower-than-anticipated growth of the local economy in the first half.
The South Korean economy grew 1.9 percent from a year earlier in the first six months of the year. The BOK monetary board is scheduled to hold its next rate-setting meeting Wednesday.
"Also, low inflation may be another factor contributing to increased possibility of a rate cut, in that the country continues to see low price increases even though there may be temporary factors causing the low price rises," Kim Yoo-mi, analyst at Kiwoom Securities.
Another factor in focus is corporate earnings.
Market kingpin Samsung Electronics said last week its third-quarter operating profit is estimated at 7.7 trillion won ($6.47 billion). This exceeds market expectations of 6.99 trillion won, but would still be a more than 50 percent plunge from the same period last year.
Kim Byung-yeon, an analyst at NH Investment, said Samsung may be only one of many disappointments.
"The combined operating profit of KOSPI-listed firms and their net profit in the third quarter are expected to come to 34.6 trillion won and 24.1 trillion won, marking a 34 percent and 35 percent on-year drop, respectively," Kim said.
This week, foreigners sold a net 97.6 billion won worth of local shares, staying net sellers for an eighth consecutive session before snapping their selling streak Friday.
Individuals dumped a net 226 billion won, while institutions scooped a net 296 billion won. (Yonhap)