Wall Street gives Kospi a boost

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Wall Street gives Kospi a boost

Backed by an overnight recovery on Wall Street, Korea’s benchmark stock market index, the Kospi, snapped a three-day decline and surged 2.8 percent yesterday.

The Kospi gained 43.17 points to 1,578.71 points. Most local analysts, however, said it is too early to see light at the end of the tunnel.

“The main buying force today was the computer,” said Lee Jae-man, an analyst at Tong Yang Investment and Securities. Program-based buying amounted to 173.5 billion won ($170.8 million), leading buyers on the day. Foreigners sold a net 41.8 billion won.

“Foreigners are selling less than before, but they are still taking a wait-and-see attitude,” Lee said.

He said foreigners may continue their selling spree, depending on what the Bank of Korea decides today on the key interest rate. Other factors are economic uncertainty and inflation.

Choi Jae-sik, a senior analyst with Daishin Securities, forecast that a full recovery is unlikely to come until the end of this year.

“Foreigners continue to secure cash, and institutional and retail investors have qualms about the direction of the market,” Choi said. “Unless the business data of U.S. companies for the third quarter comes out positively and erases uncertainty, it won’t be easy for the local market to find upward momentum.”

Park Jin-ho, an analyst at Daewoo Securities, was optimistic. He said that with more good news, the global equity markets will be able to initiate a long-awaited rebound.

“Today’s recovery has an important implication on the local market,” Park said. “It shows the Kospi has the potential to overcome negative factors.”

On Tuesday the U.S. Dow Jones industrial average rose 2.9 percent after the Fed froze the interest rate. Lower oil prices also boosted the U.S. market.

By Moon Gwang-lip Staff Reporter [joe@joongang.co.kr]

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