Worst-Is-Over View Spreads in Markets

The sentiment of investors on Seoul stock markets is likely to improve this week on the better-than-expected report of U.S. economic growth on Friday.

The U.S. Commerce Department reported Friday that the country's gross domestic product rose 2 percent for the first quarter, far exceeding U.S. analysts' expectation of 1.1 percent.

Analysts now say that the view that the worst is over in the U.S. economy had already been factored into New York stock prices. The Nasdaq composite index responded to the bullish report with a relatively modest 2 percent rise on Friday to close at 2,075.68.

But the expectation that U.S. and Korean business will begin to improve in the third or fourth quarter is likely to spread further, due to the U.S. economic growth report, encouraging investors to buy stocks with good earnings.

This brightening of investor sentiment has already begun to appear on the local stock market. Institutional investors have become net buyers after a long period of selling. Stocks with improved earnings, such as Hyundai Motor Co., Hyundai Mobis, LG Household & Health Care Ltd., Pacific Corp. and Daewoo Shipbuild-ing and Marine Engineering Co., have continued to rise in heavy trading.

Most analysts said that they expected the Korea Composite Stock Price Index would fluctuate between 540 and 580 points. It would be difficult for the index to exceed the 580 level, they thought, due to prospective heavy profit taking. But they expected individual issues to make varied and large movements, based on the amount of customer deposits, about 8 trillion won ($6 billion).

A feature of the recent market is that stocks with improved earnings or other bullish factors rise, defying the movement of other issues, unlike the pattern early in the year when most stocks moved up or down together. The new pattern was taken as an indication that investor sentiment has stabilized.

by Kim Kwang-ki