Seoul shares likely to go through volatile session

SEOUL, Nov. 22 (Yonhap) -- South Korean stocks could continue to rally into next week, but analysts expressed doubt Saturday that the upward trend would last as investors remain jittery over prospects that the global financial turmoil will affect the real economy.

The benchmark Korea Composite Stock Price Index (KOSPI) plunged 84.53 points, or
7.7 percent, this week to end at 1,003.73, hit by deepening concerns over a
possible global economic recession. Earlier sharp declines were in part pared by
a 5.8 percent bounce-back on Friday.
Throughout the week, however, local equity markets fluctuated wildly in response
to changes in the U.S. stock market, proving their vulnerability to external
instability.
Analysts said that last-week's rally will set an optimistic tone for investors
here but cast doubt over how long the upward move will continue.
"Markets have been seeing an expanded range of fluctuations, upward or downward,
which means that investors are responding very sensitively even to small pieces
of news," said Kim Jung-hyun, an analyst at Goodmorning Shinhan Securities.
The ongoing financial turmoil is taking its toll on the real part of the
export-driven South Korean economy. Tightening credit conditions are particularly
affecting banks, shipyards and construction firms, which account for a
substantial chunk of the nation's gross domestic demand.
Think tanks and investment firms recently began rushing to revise down their
growth projections for South Korea, with the Switzerland-based UBS predicting a 3
percent contraction.
One bright spot, however, came through foreign investors, who bought more than
they sold on Friday, snapping their eight-day selling spree. Massive foreign
sell-off caused the KOSPI to lose ground for an eighth consecutive session since
Nov. 11.
Adding to the good news was Wall Street's sharp rallies on Friday. The Dow Jones
industrial average jumped 6.54 percent, rebounding over the 8,000-point mark,
while tech-heavy NASDAQ surged 5.18 percent.
The rally was attributed to expectations that President-elect Barack Obama
appeared ready to tap New York Fed president Timothy Geithner as the next
treasury secretary.
"Still, chances are very high that a small piece of unconfirmed news could prompt
a selling spree, sending the market into a tailspin at any time," Kim added.
kokobj@yna.co.kr
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