ID :
199469
Sat, 08/06/2011 - 11:27
Auther :
Shortlink :
https://oananews.org//node/199469
The shortlink copeid
S. Korean shares likely to be rocked by uncertainties next week
(ATTN: UPDATES with more comments, details from paras 8)
SEOUL, Aug. 6 (Yonhap) -- South Korean stocks are expected to face a considerable amount of uncertainties and volatile sessions next week following the downgrading of the U.S. sovereign credit rating, analysts said Saturday.
Market experts said that the decision by Standard and Poor's Rating Services (S&P) to lower the credit rating of the world's largest economy one-notch from "AAA" to "AA plus" will impact the local bourse.
They said that the blow could cause the KOSPI, the country's key stock index, to either lose more ground or make a comeback after overcoming the initial blow, helped by possible moves by the U.S. Federal Open Market Committee (FOMC), which will hold a meeting on Tuesday (local time). The FOMC could opt to announce a new economic stimulus plan that could assuage market jitters.
Insiders here said that there will be a need to see how the market reacts since Washington said the unemployment rate for July stood at 9.1 percent with nearly 120,000 new jobs being created in the month, much more than originally anticipated. More jobs usually translates into growth, which benefits the stock market.
The KOSPI, meanwhile, plunged 8.88 percent, or 189.46 points, this week to close at 1,943.75 on Friday, mainly weighed down by the controversy surrounding the U.S. debt ceiling and its effects on the overall economy.
Mounting concerns that the U.S. economy may experience a so-called double-dip further caused the market to fall sharply, while the unfolding financial crisis in countries such as Spain and Italy exacerbated the problem.
Foreign investors shed more shares than they bought, which caused numbers to fall.
"Because there has never been a downgrade of the U.S. credit rating, this can cause great confusion in the international financial market," said Park Yeon-chae, head of market research at Kiwoom Securities.
Others, like Shin Hwan-jong, an analyst at Woori Investment & Securities, said because U.S. treasuries have long been considered as the safest investment, any moves that can shake this belief could affect global economic confidence.
This could cause markets to crash and seriously rock the foreign exchange rates of many countries.
Kim Se-jung, an analyst at Shinyoung Securities, however, claimed that although global financial developments are taking place at a faster pace than anticipated, the market had been aware that the change was coming.
"Even if the S&P's move affects the risk level of U.S. Treasuries, there really is no other safer investment than bonds issued by Washington," he said. Kim pointed out that because there is no alternative, U.S. Treasuries will not really lose their attractiveness as a means to invest in safe assets.
Others said that it is too early to determine how the market will respond overall until trading begins. They added that the planned meeting of the Bank of Korea's Monetary Policy Committee, which sets the country's key interest rate, could influence stock prices.
Raising the interest rate could help stabilize inflation pressure, which rose to 4.7 percent in July, but could adversely affect economic growth by making borrowing more costly.
SEOUL, Aug. 6 (Yonhap) -- South Korean stocks are expected to face a considerable amount of uncertainties and volatile sessions next week following the downgrading of the U.S. sovereign credit rating, analysts said Saturday.
Market experts said that the decision by Standard and Poor's Rating Services (S&P) to lower the credit rating of the world's largest economy one-notch from "AAA" to "AA plus" will impact the local bourse.
They said that the blow could cause the KOSPI, the country's key stock index, to either lose more ground or make a comeback after overcoming the initial blow, helped by possible moves by the U.S. Federal Open Market Committee (FOMC), which will hold a meeting on Tuesday (local time). The FOMC could opt to announce a new economic stimulus plan that could assuage market jitters.
Insiders here said that there will be a need to see how the market reacts since Washington said the unemployment rate for July stood at 9.1 percent with nearly 120,000 new jobs being created in the month, much more than originally anticipated. More jobs usually translates into growth, which benefits the stock market.
The KOSPI, meanwhile, plunged 8.88 percent, or 189.46 points, this week to close at 1,943.75 on Friday, mainly weighed down by the controversy surrounding the U.S. debt ceiling and its effects on the overall economy.
Mounting concerns that the U.S. economy may experience a so-called double-dip further caused the market to fall sharply, while the unfolding financial crisis in countries such as Spain and Italy exacerbated the problem.
Foreign investors shed more shares than they bought, which caused numbers to fall.
"Because there has never been a downgrade of the U.S. credit rating, this can cause great confusion in the international financial market," said Park Yeon-chae, head of market research at Kiwoom Securities.
Others, like Shin Hwan-jong, an analyst at Woori Investment & Securities, said because U.S. treasuries have long been considered as the safest investment, any moves that can shake this belief could affect global economic confidence.
This could cause markets to crash and seriously rock the foreign exchange rates of many countries.
Kim Se-jung, an analyst at Shinyoung Securities, however, claimed that although global financial developments are taking place at a faster pace than anticipated, the market had been aware that the change was coming.
"Even if the S&P's move affects the risk level of U.S. Treasuries, there really is no other safer investment than bonds issued by Washington," he said. Kim pointed out that because there is no alternative, U.S. Treasuries will not really lose their attractiveness as a means to invest in safe assets.
Others said that it is too early to determine how the market will respond overall until trading begins. They added that the planned meeting of the Bank of Korea's Monetary Policy Committee, which sets the country's key interest rate, could influence stock prices.
Raising the interest rate could help stabilize inflation pressure, which rose to 4.7 percent in July, but could adversely affect economic growth by making borrowing more costly.
