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S Korea's stock market may languish this week

SEOUL: Foreign investors snapping up electronics shares drove up South Korea's stock market last week but the main board could languish this week unless the buying spreads into other sectors, analysts said.

The benchmark Korea Composite Stock Price index was expected to flirt with the 900-point mark with its range trapped between 880-920 points, they said.

The Korea Composite Stock Price index (KOSPI) closed up 0.17 points on Friday or 0.02 percent at 894.83. It rose 3.5 percent on the week, stealing some thunder from the high-flying over-the-counter Kosdaq market .

"If foreign buying does not spread into other sectors, the benchmark index will find it difficult to shake off profit-taking near 900 points," said Kang Shin-woo, top fund manager with Hyundai Investment Trust Mangement Co.

Selling pressure will come from investment trusts, the largest players in the local equity market. Analysts said the trusts have been liquidating shares to raise cash to meet redemptions of equity-linked beneficiary certificates in funds they manage.

Foreign investors keyed on electronics shares last week as their net buying on the main board surged to a record high of 855.8 billion won.

"Foreign investors are the sole buying force in the main market with the buying centering in just a few electronics titles," said Kim Ki-tae, a director with Indosuez Securities.

Foreign investors poured about 700 billion won alone last week into Korea's two biggest electronics companies, Samsung Electronics and Hyundai Electronics

Analysts noted that an attractive price gap between Samsung's overseas depositary receipts (DRs) and its local shares stirred strong foreign buying.

The Kosdaq over-the-counter market is expected to puase for breath this week after its month-long bull run.

The market had risen some 57 percent between January 27 and March 2 before closing on Friday down 8.70 points or 3.09 percent at 272.40.

"The market seems to be taking a much-needed break after its month-long bull run," said Kang at Hyundai.

Analysts said there may be some renewed interest in Internet-related shares, which were hit on Friday by retail profit-takers.

The performance of the technology-laden Nasdaq composite index will largely affect sentiment in the local OTC market, analysts said.-Reuters