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S. Korean stocks likely to stay range-bound next week

Stocks 10:00 May 23, 2020

SEOUL, May 23 (Yonhap) -- South Korean stocks are expected to remain in a tight range next week as growing concerns over a renewed U.S.-China dispute put on downward pressure, while hopes of a vaccine for the novel coronavirus will likely support their advance, analysts said Saturday.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 1,970.13 on Friday, up 42.85 points, or 2.2 percent, from 1,927.28 a week earlier.

An electronic signboard at a KEB Hana Bank in Seoul shows the benchmark Korea Composite Stock Price Index down 1.41 percent to close at 1,970.13 points on May 22, 2020. (Yonhap)

Hopes of a quick economic recovery and development of vaccines for COVID-19 sparked global stock market rallies this week, with South Korean stocks closing higher for five consecutive sessions until Thursday.

"Clinical tests of COVID-19 vaccines will likely limit the downward movement of stocks even in the case of increased volatility in the future by promoting hopes for an early termination of the pandemic," NH Investment & Securities analyst Noh Dong-kil said.

The pledges by Washington and the U.S. Federal Reserve to take additional steps to support the economy will also continue to have a positive impact on global investors, Noh added.

The growing discord between the United States and China over the pandemic, however, may spook investor sentiment here, said Park Seok-hyun, an analyst at KTB Investment & Securities, noting the U.S.-China dispute may further escalate down the road.

"China has steadily pursued policies aimed at narrowing its (economic) gap with the U.S. and appears to have sought to turn the COVID-19 pandemic into such an opportunity since its shock has been relatively smaller," Park said.

"Hence the U.S. appears to be seeking to isolate China by not limiting its dispute with China to trade issues and expanding it to various other areas," Park added.

In his latest attack, U.S. President Donald Trump insisted it was the "incompetence of China" that led to the deaths of hundreds of thousands globally.

South Korea's exports dipped for 14 consecutive months between December 2018 and January 2020 amid the prolonged trade conflict between the world's two largest economies.

South Korean exports rebounded 4.5 percent on-year in February, shortly after Washington and Beijing signed an initial trade agreement, bringing their prolonged trade dispute to a pause.

Its exports again nose-dived after the spread of the new coronavirus peaked here, with around 900 new infection cases per day in late February and early March. The number of daily new infection cases has slowed to around 30 or less since mid-April.

This week, foreigners were net sellers, dumping a net 40 billion won. Retail investors offloaded a net 109 billion won, while institutions scooped up a net 131 billion won.

bdk@yna.co.kr
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