Seoul shares likely to drag on economic woes

SEOUL, Oct. 4 (Yonhap) -- South Korean stocks are expected to continue weak trading next week as concerns over slowing growth will likely overshadow prospects from the endorsement of a U.S. market bailout plan, analysts said.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 3.84 percent this
week to end at 1,419.65 on Thursday, largely on the U.S. House of
Representatives' rejection on Monday of the Washington-led $700 billion emergency
rescue proposal designed to buy bad debts from U.S. financial institutions. The
local market was closed Friday due to the National Foundation Day holiday.
Despite lawmakers' endorsement of the bill later in the week, analysts advised a
conservative investment strategy, saying the market is shifting its focus from
the bailout scheme to indications of an economic slowdown.
"The market's focus will shift from the bailout initiative to the actual economic
factors, which are currently severely depressed," said Lee Seung-woo, an analyst
at Daewoo Securities.
South Korea is facing risks of persisting inflation combined with slowing growth.
The country's consumer prices jumped 5.6 percent on-year in August, breaching the
Bank of Korea's target range of 2.5-3.5 percent for the ninth straight month.
The business survey index for manufacturers' expectations also declined to 78
points for October, compared with 79 the previous month, according to the bank. A
reading below 100 means pessimists outnumber optimists.
Analysts also said that the central bank's scheduled rate decision meeting next
week is not likely to catalyze investment in the market, as most predict a rate
freeze due to fears that a change might trigger volatility in the foreign
exchange market.
odissy@yna.co.kr