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Seoul bourse to be swayed by Middle East tensions

All News 11:15 January 04, 2020

SEOUL, Jan. 4 (Yonhap) -- South Korean stocks are likely to move depending on the developments in geopolitical tensions between the United States and Iran, analysts here said Saturday.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 2,176.46 points on Friday, down 0.98 percent from a week ago. The Seoul bourse only opened for three days this week due to the New Year's holidays.

On Friday, the KOSPI opened sharply higher after China decided to add more liquidity to stimulate the world's No. 2 economy, but surrendered earlier gains after the Pentagon confirmed the killing of an Iranian commander.

"With the strike, the tension between the U.S. and Iran reached its peak, and there is a possibility that Iran may retaliate against the U.S," Han Dae-hoon, an analyst at SK Securities, said. "Although investors recently opted for risky assets, with this kind of event happening, we'll have to watch closely how the situation develops."

Some analysts said the local index may see some adjustments next week with the U.S. attack, which may not last long.

"It's true that the U.S.-Iran conflict is not good for the market, but most of the time, geopolitical risks end up as short-term changers," Huh Jae-hwan, a strategist at Eugene Investment, said.

Aside from geopolitical issues, local investors will also keep their eyes on the fourth-quarter earnings guidance to be released by Samsung Electronics and LG Electronics next week and their new technologies to be unveiled at the Consumer Electronics Show (CES) in Las Vegas, Nevada, next week.

Foreigners ended up selling a net 80 billion won (US$86 million) worth of local stocks this week, while institutions offloaded a net 882 billion won. Retail investors bought a net 926 billion won.

Electricity and gas stocks were among gainers this week, while major players in the tech, auto and finance industries lost ground.

Analysts predicted that the local currency will also come under selling pressure next week due to risk-off sentiment caused by the U.S.-Iran tensions.

The South Korean won closed at 1,167.10 won against the U.S. dollar on Friday, sharply down 9 won from the previous session's close.

kdon@yna.co.kr
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