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S Korean stocks seen tracking Wall Street

SEOUL: South Korea stocks will take their cue from Wall Street this week, given the lack of domestic market-moving factors ahead of the corporate fiscal year-end on March 31, analysts and fund managers said.

But selected small caps could spark some interest on the main exchange, they added.

"The local equity market is seen moving in step with Wall Street," said Jang Do-hun, a fund manager at Korea Investment Trust Co.

"If the Dow stabilises next week, the KOSPI should stay in a boxed range of 850 to 930 points," Jang added.

The benchmark Korea Stock Price index (KOSPI) ended up 6.77 points or 0.77 percent at 891.36 on the strength of selected small caps. It fell 0.4 percent on the week.

Analysts said the main market lacked momentum despite favourable external conditions such as a stronger yen and signs of global oil prices easing.

"The main exchange should expect persistent institutional sales," said Kang Shin-woo, a fund manager at Hyundai Investment Trust Co.

"Institutions such as insurance firms are unloading their blue chip portfolios to realize gains before the corporate fiscal year ends on March 31."

This, combined with redemptions of equity-linked beneficiary notes in funds that investment trusts manage would dwarf any institutional buying, analysts said.

But they expected small caps to chalk up gains after rising some 20 percent since mid-February.

Shares of companies with holdings in Internet-related business are likely to remain the focus, they said.

Analysts said the Kosdaq over-the-counter market should consolidate before advancing above the key 300 mark.

The Kosdaq index closed on Friday up 1.55 points or 0.55 percent at 283.44.

It has seen a feverish 60 percent jump since late January.

The performance of the tech-heavy Nasdaq Composite index, which broke above 5,000 points on Thursday, will play a key role in the direction of the local OTC market, analysts said.

"Individual investors are still inclined to chase after risky Kosdaq shares to reap high returns," said Choo Hee-yup, a strategist at Dongwon Securities.

But analysts warned short-term profit takers are likely to dump high-flying tech shares whenever they creep higher.-Reuters