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Foreign selling expected to keep weighing on market next week

All News 10:00 April 02, 2016

SEOUL, April 2 (Yonhap) -- South Korean shares are expected to move in a tight range next week as foreign investors could keep trimming their holdings of local stocks but ample liquidity conditions around the globe will likely prop up the overall market mood, analysts said Saturday.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 1,973.57 on Friday, down 0.51 percent from a week earlier. This marked the second straight week of declines following a 0.41 percent setback last week.

Throughout this week, the market was swayed by jitters over what U.S. Fed Chair Janet Yellen would say about monetary policy for the world's largest economy. Bolstered by Yellen's mid-week speech interpreted as a signal for no near-term rate hike, the market rebounded on Wednesday.

The gains, however, were pared in the following days as foreign investors offloaded their holdings to lock in profits. Foreigners sold a net 342.02 billion won worth of local shares this week.

Analysts expect that foreigners' sell-offs will continue to serve as a drag on the local stock market as they could try to realize currency conversion-related profits stemming from the fall in the greenback.

"As such profit-taking will continue, the KOSPI will likely take a breather. Still the global liquidity conditions remain robust," said Ko Seung-hee, an analyst at KDB Daewoo Securities.

The analyst said that what investors pay attention to is the Federal Open Market Committee's March minutes to be announced on Wednesday, which could give a clearer clue to where U.S. monetary policy is headed.

The report on foreign reserves held by China on Thursday is also cited as key data which will be closely analyzed by investors, he added.


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