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Blue chips set to lead Seoul stocks higher

SEOUL: South Korean stock prices are likely to rise this week on expectations that investors will turn their sights on blue chips left out in the recent rush into telecom shares, traders said.

But they said gains may be limited early in the week if some investors choose to take profits as the benchmark index on the main board approaches resistance levels near the 1,000 mark.

Steep losses on Wall Street on Friday would also pressure the main board and technology-laced Kosdaq market on Monday, dealers said.

The benchmark Korea Composite Stock Price Index (KOSPI) finished down 12.96 points or 1.34 percent at 953.22 on Friday. It rose 3.00 points or 0.32 percent over the week.

Analysts expect the KOSPI to move in a range between 940 and 980 points this week.

"Investors who had aggressively picked up telecom stocks will hunt for a broader range of issues, such as non-telecom blue chips and pharmaceuticals," said Paulo Rhee, deputy head of research at HSBC Securities.

On Friday, two of Korea's biggest telecoms, SK Telecom 17670 and Dacom 15940, shed some of their recent strong gains as investors grew concerned the government might block SK Telecom's proposed merger with unlisted Shinsegi Telecomm Inc.

The Information Ministry announced on Friday that the deal would only be approved if their combined market share was kept below 50 percent by the end of this year.

The market has powered ahead of late as local and foreign investors joined the global bandwagon for gravity-defying telecommunications.

Analysts remained optimistic about gains on the Kosdaq over-the-counter .KQ11 market despite Friday's slide on Wall Street and in the technology-rich Nasdaq.

Kosdaq will be buoyed by the continued migration of foreign and individual investors from the main board and by a series of new funds that are being launched that include only Kosdaq issues, analysts said.

"More attention is put on Kosdaq. More investors are pulling money out of the main exchange to invest on Kosdaq," said Cha Jinho, a Kosdaq analyst at Hyundai Securities.

The Kosdaq index finished up 16.39 points or 6.67 percent at 262.08 on Friday. It rose 44.38 points or 20.39 percent for the week.

The Dow Jones industrial average fell 218.42 points or 2.05 percent to end at 10,425.21 on Friday. A sell-off in shares of the world's biggest software company, Microsoft, dragged heavily on the market, already frayed by worries about an economic slowdown.

The Nasdaq Composite Index shed 90.18 points or 2.01 percent to 4,395.45.-Reuters