Seoul bourse to trade sideways amid lingering economic woes

SEOUL, June 6 (Yonhap) -- South Korea's stock market is expected to move sideways
next week as investors feel the burden from recent rallies amid lingering
concerns that rising oil prices could weigh on the nation's export-driven
economy, analysts said Saturday.
The benchmark Korea Composite Stock Price Index (KOSPI) closed this week at
1,394.71, down 1.18 points, or 0.85 percent from the previous week, after surging
to an intraday high of 1,437.76 on Tuesday.
Indicators are showing signs the nation's economy might be bottoming out after
suffering from financial turbulence that began last summer and resulted in global
economic recessions. Industrial output is rebounding and the financial markets
seem to be stabilizing.
Opinions, however, are divided over the pace of an economic recovery, with
policymakers warning that it is premature to be optimistic as exports and
domestic demand still remain in a slump.
The local currency's strength against the U.S. dollar is adding to woes for
exporters as a stronger won makes their products more expensive in overseas
markets.
Rising oil prices are also making it tough for local companies that depend
heavily on overseas crude and other materials for production.
One of the key factors affecting the direction of the market is a meeting by the
central bank later next week during which policymakers are to set the nation's
overnight key interest rate.
Analysts say the Bank of Korea will likely maintain the rate at a record low of 2
percent as it believes that now is the time to stimulate the sluggish economy
rather than focusing on controlling consumer prices.
"With few clues hinting at the direction of the market, investors will be
required to focus selectively on shares that could benefit from daily news," said
Kim Jung-hyun, an analyst at Goodmorning Shinhan Securities. "The won's strength
and rising oil prices could affect the market."
kokobj@yna.co.kr
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