Stock prices home and abroad would go up and down for sometime

Stock prices home and abroad would go up and down for sometime. August. 31, 2015 07:06. jaj@donga.com.

Escaping from the “China shock,” the global stock market appears to calm down. Some, however, see that the stock prices home and abroad would go up and down for some time before uncertainty for increase rate increase is eliminated in the U.S.

On Friday, the Dow Jones Industrial Average finished at 16,643.01, 1.1 percent up from a week ago. S&P 500 and NASDAQ Composite went up by 0.9 percent and 2.6 percent, respectively. Some 11.8 percent up from a week earlier, the WTI benchmark recovered to the range of 45 U.S. dollars per barrel.

It is seen that the Chinese stock market, which used to threaten the global equity market, has rallied on the continuous policy for fiscal stimulus by the Chinese government. On Tuesday, Beijing brought down benchmark interest rate and deposit-reserve ratio while adding short-term liquidity so as to stimulate the stock market. This has pushed up the Shanghai composite index that had seen 5-trading day fall to 10.4 percent for two days from Thursday. Rising for four days (Aug. 25-28), the domestic equity market recovered to 1,930 as well.

The market specialists, however, reckon that it would be hard to see the stock prices make quantum leap since foreigners keep selling them and the arbitrage trading is expected to increase once the KOSPI goes over 1,950. Foreign investors have maintained their selling spree for 17 consecutive trading days from Aug. 5 (some 4 trillion Korean won, or approx. 3.39 billion U.S. dollars), which is the sixth longest since 2003 when the relevant data began to be compiled.

“The global equity prices would repeat the trend of going up and down by a small margin before the anxiety for possible interest rate increase is eased at the Federal Open Market Committee," said Bae Seong-jin, researcher of Hyundai Securities. "The KOSPI is expected to stay in the range of 1,900 to 2,000 for some time.”