SEOUL, Feb. 19 (Korea Bizwire) — South Korean stock markets are expected to continue to face volatile sessions next week, largely on persistent uncertainties about the U.S.-Russian military standoff over Ukraine, analysts said Saturday.
The benchmark Korea Composite Stock Price Index (KOSPI) closed at 2,744.52 points Friday, little changed from 2,747.71 points a week ago.
The key stock index fluctuated much this week, mostly caused by global inflation risks and rising tensions between the United States and Russia over Ukraine.
Analysts said global inflation worries and geopolitical risks surrounding Ukraine will continue to serve as major factors that could determine the direction of the stock markets.
“The Ukraine risk will continue to weigh on the markets in the short term,” said NH Investment & Securities analyst Kim Young-hwan.
“Investors are worried that even if Russia invades Ukraine and it causes Wall Street plunge, the Fed would not be able to step in to help policy-wise. The war would likely raise energy prices and further fan the inflation hike,” he added.
The U.S.-Russia tensions elevated this week, as the U.S. and NATO members claimed Russia was building up military troops along the Ukraine borders.
Uncertainty remains high over the Ukraine crisis, but some remain cautiously optimistic as top diplomats of the U.S. and Russia have agreed to hold a meeting next week.
Inflation risks will also likely remain as yet another major risk for the markets.
In particular, hawkish comments by Fed officials next week could dent investor sentiment, as they could hint at faster- and steeper-than-expected rate hikes in the U.S.
South Korea’s central Bank of Korea will also hold a rate-setting meeting Thursday. Observers expect the BOK will likely freeze its key policy rate following a quarter percentage point increase last month but remain hawkish amid inflation worries.