KOSPI May Trade Higher On Monday

(RTTNews) - After halting on Thursday the five-day winning streak that saw the market collect nearly 200 points and more than 20 percent, the Sough Korean stock market turned right back to the upside again on Friday. Now analysts say that the KOSPI could extend those gains and move further to the upside again on Monday.

The global forecast is mixed, with weak economic data out of the United States reinforcing fears for a deep global recession. But a strong finish on Wall Street and positive reinforcement from Washington, coupled with an economic stimulus package in China, are expected to provide the Asian markets with a dose of optimism heading into the start of a new trading week.

The KOSPI finished sharply higher on Friday after a 5 percent decline in the morning session, boosted by the financial sector after the South Korean central bank trimmed interest rates. Industrials and steel companies also finished higher, although the gains were tempered by weakness among the telecoms.

For the day, the index added 42.27 points or 3.87 percent to close at 1,134.49 after trading between 1,038.72 and 1,134.50. Volume was 839 million shares worth 6.85 trillion won.

Among the gainers, Woori Finance Holdings jumped 5.4 percent, while Shinhan Financial Group surged 6.6 percent, Daewoo Engineering & Construction soared 8.5 percent, Kumho Industry advanced 8.6 percent, POSCO rose 2.8 percent and carmaker Hyundai Motor gained 11.2 percent.

Bucking the trend, top mobile carrier SK Telecom fell 1.1 percent and fixed-line telecom giant KT dropped 0.3 percent.

Wall Street provides a fairly positive lead as stocks saw considerable strength during trading on Friday with traders once again picking up stocks at reduced levels. After the worst two-day loss since 1987 on Wednesday and Thursday, the strength in the markets came as investors ignored some negative economic news to seek out bargain stocks.

On the economic front, the Labor Department released its monthly employment report for October, showing that non-farm payroll employment fell by 240,000 jobs during the month. Economists had expected a somewhat more modest decrease of about 200,000 jobs. With the decline, the unemployment rate jumped to 6.5 percent in October, its highest level since March of 1994.

In other news, President George W. Bush guaranteed that his administration would continue to work to combat the severe challenges facing the U.S. economy despite the minimal time he has left in office. Bush said that his administration has taken "aggressive and decisive measures" to combat the slowing economy, he cautioned that "it will take time" for the impact of these measures to be seen. He added that despite the discouraging news and high rate of unemployment, there are some "encouraging signs."

While the major averages gave back some ground in late day trading, the showed a notable move back to the upside going into the close. The Dow closed up 248.02 points or 2.9 percent at 8,943.81, the Nasdaq closed up 38.70 points or 2.4 percent at 1,647.40 and the S&P 500 closed down 25.87 points or 2.9 percent at 930.75.

Despite Friday's gains, the major averages all closed lower for the week due to the sell off that was seen in the two previous sessions. The Dow posted a 4.1 percent loss for the week, while the Nasdaq and the S&P 500 posted weekly losses of 4.3 percent and 3.9 percent, respectively.

In economic news, the Bank of Korea on Friday morning pared interest rates by 25 basis points from 4.25 percent to 4.00 percent, marking the bank's third rate cut in the last month. The BoK trimmed rates by 25 basis points on October 9 and then again by 75 basis points in an emergency meeting on October 27. Before raising rates in August to combat inflation, the board had left interest rates at 5.00 percent for 11 straight meetings. The cuts are part of a coordinated effort by central banks around the world in the face of a struggling global economy, including the United States, the European Union, Great Britain and China, among others.

Also, South Korea's overseas investments jumped this year as companies stepped up efforts on corporate takeovers and energy-development projects in foreign countries, according to a government report. The Finance Ministry's report showed that South Korea's overseas investments totaled $22.81 billion during the first nine months of this year, up from the same period a year earlier.

Finally, South Korea will announce producer price index numbers for October sometime during the first three days of this week. Analysts are expecting an increase of 10.1 percent on year, easing from the 11.3 percent annual expansion in September.

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