KOSPI Expected to Remain Steady Despite US Woes

Korea's stock market momentum is expected to settle in the coming week amid worries that a U.S. plan to reign in bank risk-taking will weigh heavily on investor sentiment.

Analysts say Korean stocks will inevitably face a sluggish start next week, but that their recent momentum will not turn south easily. The market is expected to move in a tight range on the kind of bargain hunting that helped reduce losses late last week, they added.

"Despite the external shocks, it is too early to say that the KOSPI has lost its recent upward momentum," said Lee Kyung-min, an analyst at Woori Investment Securities Co.

"If the gauge can stay around the 1,660 to 1,670 level, the market is expected to move in a recently formed tight range throughout next week."

Investors will likely pay more attention to the upcoming fourth-quarter earnings results of heavyweights such as Samsung Electronics and Hyundai Motor, analysts said.

Korea's central bank will announce fourth-quarter gross domestic product data this week, which will provide a glimpse into economic conditions and help investors determine the direction of the overall equity market, they added.

The benchmark Korea Composite Stock Price Index (KOSPI) ended at 1,684.35 on Friday, down 17.45 points, or 1.03 percent, from one week earlier.

The Seoul bourse started strong this week, exceeding 1,720 at one point. But the market gave up more than it gained after U.S. President Barack Obama said his government would limit the investment activities of financial institutions in hopes of preventing a repeat of the financial crisis.

Financial shares were among the hardest hit, with other large-cap shares also losing ground on worries over a possible contraction in market liquidity.

On Friday, the Dow Jones industrial average plunged 2.1 percent, following a sharp decline the previous day, dimming the outlooks for the South Korean and Asian markets, which usually track the ups and downs on Wall Street.