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Seoul stocks likely to suffer extended slump this week

Stocks 10:35 June 14, 2020

SEOUL, June 14 (Yonhap) -- South Korean shares are expected to hover below the psychologically important 2,200-point level this week amid concerns over a resurgence in the coronavirus, which will also cause investor sentiment to wobble, analysts said Sunday.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 2,181.87 points Friday, down 2.3 percent from a week ago.

The KOSPI has been struggling to stay above the 2,200-point threshold seen as a return to a level seen prior to the coronavirus pandemic.

The United States Federal Reserve's inclination for monetary easing, on the other hand, is a positive factor for the index's performance, analysts said.

"Skepticism over the U.S. economic recovery is hurting investor sentiment, on top of the coronavirus resurgence fears," NH Investment & Securities analyst Noh Dong-kil said.

An electronic signboard at the trading room of Hana Bank in Seoul shows the benchmark Korea Composite Stock Price Index (KOSPI) having plunged 44.48 points, or 2.04 percent, to finish at 2,132.30 on June 12, 2020. (Yonhap)

Investor sentiment underwent a downturn after Fed Chairman Jerome Powell warned against COVID-19's potential damaging of the U.S. economy in the long term and uncertainties over how the economy will fare.

The pessimism led to a 6.90 percent plunge in the Dow Jones Industrial Average on Thursday (New York time), with the tech-laden NASDAQ and S&P 500 down 5.27 percent and 5.89 percent, respectively.

The Dow made a partial recovery on Friday (New York time), moving up 477.7 points, or 1.90 percent, to close at 25,605.54. The gains were seen as a "countermove" against Thursday's big fall, analysts said.

Investors now have their fingers crossed for China's May retail sales, an indicator of consumer sentiment, set to be released Monday.

"Judgment on China's economic recovery will hold significant influence over South Korea's exports and stock index hike," KTB Investment & Securities analyst Park Seok-hyun said.

U.S. retail sales will also be announced on Tuesday.


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