Seoul stocks remain volatile on economic uncertainty

SEOUL, March 7 (Yonhap) -- South Korean stocks are expected to remain highly
volatile next week on investor concerns over fallout from the ongoing global
financial turbulence and the fast-slumping economy, analysts said Saturday.
The nation's key stock index, KOSPI, closed Friday at 1,055.03 points, down 8
points or 0.75 percent from a week earlier. The index briefly fell below the
1,000 mark as investor sentiment was hurt by the tumbling local currency and
growing uncertainty over how the U.S. government handles embattled banks.
It pared losses later on optimism that China will announce a large-scale economic
stimulus package and increased institutional investment, slowing the pace of
foreign sell-offs.
Anxiety over the possible bankruptcy of U.S. giant General Motors and default
risks in Eastern Europe, however, will likely dominate investors' attention next
week as they could add to the burdens of the nation's slumping economy.
"At least until the end of this month, it seems that stocks will undergo ups and
downs in a tight range," said Lee Seung-woo, an analyst at Daewoo Securities.
"Investors should take a strategic approach, not too aggressive or conservative."
The weakening won could weigh on investor sentiment. The won plunged to an
11-year low against the greenback on Monday, flirting with the 1,600-won mark,
before trimming some losses thanks to government's dollar-selling intervention.
"Jitters remain among investors about the currency market," said Kim Jung-hyun,
an analyst at Goodmorning Shinhan Securities. "The government, however, is
showing strong will to defend the won-dollar exchange rate at below the 1,600
mark, and this could ease anxiety to some extent, though steadily."
With the economy slipping deeper into recession, investors will turn their focus
to what monetary action will be taken by the nation's central bank when its
policymakers meet Thursday, analysts said.
The Bank of Korea is widely expected to further cut its key interest rate for
March after slashing the benchmark rate by a total of 3.25 percentage points
since October. However, an unexpected hike in consumer prices in February might
affect its expansionary policy direction, they said.
kokobj@yna.co.kr
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