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Seoul stocks likely to tread on thin line next week amid earnings hope, virus woes

Jul 25, 2021

Seoul (South Korea), July 25: South Korean stocks are likely to face volatility next week as the virus resurgence continues to sap demand for risky assets, while optimism for robust earnings provides some relief.
The benchmark Korea Composite Stock Price Index (KOSPI) closed at 3,254.42 points Friday, down 0.69 percent from a week ago.
The key stock index retreated in the first three sessions of this week, as daily virus cases again spiked, hitting a fresh high of 1,842 Thursday, despite the toughest virus curbs in the greater Seoul area.
But the index managed to remain in positive terrain in the last two sessions of the week on strong earnings reports.
The government on Friday extended the semi-lockdown restrictions in the wider Seoul area for another two weeks.
Foreigners sold a net 1.23 trillion won (US$1.07 billion) on the main bourse this week, while retail investors bought 743 billion won. Institutions purchased a net 494 billion won.
Analysts said local stocks have room for further gains next week, but uncertainties from the COVID-19 resurgence may continue to weigh on the local stock market.
"The second-quarter earnings of South Korean companies seem sturdy, but the recent stock prices seem to have become less susceptible to earnings reports," NH Investment & Securities analyst Kim Young-hwan said.
Investors are concerned that the corporate earnings may decline after peaking by the third quarter this year, he added.
"Now investors are wondering whether the corporate earnings would stay solid down the road," Kim said.
Next week is packed with a slew of key economic data to be released at home and abroad, such as South Korea's second-quarter gross domestic product (GDP).
Results of the U.S. Federal Reserve meeting will be released Thursday (Korean time), with the market expecting that the Fed would not make any significant changes in its economic assessment.
The U.S. second-quarter GDP will be released as well on Thursday (Korean time).
Source: Yonhap