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Seoul stocks likely to be volatile next week on tapering uncertainties

All News 10:00 September 04, 2021

SEOUL, Sept. 4 (Yonhap) -- South Korean stocks are likely to face increased volatility after robust gains this week amid uncertainties over the U.S. Federal Reserve's tapering plans, analysts said Saturday.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 3,201.06 points Friday, up 2.1 percent from a week ago.

The key index started this week with gains as investor sentiment was backed by comments late last week from U.S. Federal Reserve Chair Jerome Powell that signaled the Fed was in no rush to raise interest rates, although it could start tapering asset purchases this year, citing signals of U.S. economic recovery from the pandemic.

KOSPI's gains this week were largely driven by foreign buying as overseas investors scooped up a net 2.09 trillion won (US$1.76 billion), while institutions offloaded a net 1.48 trillion won. Retail investors sold a net 682.3 billion won.

Electronic signboards at a Hana Bank dealing room in Seoul on Sept. 3, 2021, show the benchmark Korea Composite Stock Price Index (KOSPI) closed at 3,201.06 points, up 25.21 points, or 0.79 percent, from the previous session's close. (Yonhap)

Analysts expect uncertainties in the market to grow next week as investors try to predict the timing of the Fed's tapering plans.

"Considering the mix of dovish and hawkish tendencies, this will likely fuel uncertainties in the market rather than offer a clear direction," Kiwoom Securities analyst Kim Yu-mi said.

Mirae Asset Securities analyst Park Hee-chan said investors will focus on new reports on the U.S. economy set to be released next week that will offer clues about the timing of the Fed's plans.

The Federal Reserve is set to release its so-called Beige Book on Sept. 8 (U.S. time) that outlines U.S. economic conditions.

Kim added investors will also likely keep attention on the European Central Bank's (ECB) meeting next week that could announce tapering of its asset purchases program.

Park said the ECB is likely to signal tapering plans after the Eurozone's consumer prices rose 3 percent on-year last month, the highest in nearly a decade.


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