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Seoul stocks to build up gains next week if China lifts suspension order

All News 12:00 February 08, 2020

SEOUL, Feb. 8 (Yonhap) -- South Korean stocks may rise next week if China lifts its suspension order for manufacturers, analysts said Saturday.

The benchmark Korea Composite Stock Price Index (KOSPI) ended 0.7 percent lower at 2,211.95 points on Friday, snapping a three-day winning streak, as institutions turned net sellers on profit-taking.

The KOSPI index jumped 5.1 percent over the previous three sessions, helped by China's stimulus measures to shore up its economy amid the fast-spreading novel coronavirus and the Chinese plan to cut tariffs on $75 billion of U.S. goods next week.

This photo taken Feb. 7, 2020, shows the dealing room of KEB Hana Bank in Seoul. (Yonhap)

Investors are now shifting their focus to whether China will lift its extended suspension order for local manufacturers early next week, analysts said.

China's Lunar New Year holiday started on Jan. 24 and usually lasts for a week, but Beijing has extended it until Feb. 9 to help contain the coronavirus.

"If Beijing extends the suspension order for local manufacturers, it will weigh on Asian equities, including the KOSPI next week. No extension would give a boost to investor sentiment, allowing the index to return to the level before the virus broke out," NH Investment & Securities Co. analyst Kim Byoung-youn said.

South Korean carmakers have already suspended their domestic car assembly lines, or are considering halting some of their lines next week, due to the lack of auto components shipped from China.

A prolonged supply disruption of parts from China is expected to result in heavy production losses for local carmakers and dismal first-quarter earnings results.


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