South Korean stocks are one of Asia's best performers so far this week but just how long can the market maintain its apparent resilience amid global volatility?
Experts say there are a number of factor to watch for the answer—China, the Federal Reserve, North Korea, local buyers and smartphone sales are chief among them—with the outcome not yet clear.
As of Friday's market close, the benchmark Kospi was 3.3 percent higher for the week after losing more than 8 percent in the first three weeks of August. The gains put the index well ahead of regional peers like Japan, China, Hong Kong and Australia.
"After a really sharp selloff, it's not surprising to see a rebound but whether sentiment returns on a more sustainable basis depends on China's recovery and capital outflows ahead of a U.S. rate hike," remarked Audrey Goh, senior investment strategist at Standard Chartered.
Beijing is Seoul's largest trading partner so the former's stock market rout, slowing growth and recent currency devaluation impact Korea, a fellow export-oriented economy. Meanwhile, data earlier this month showed outflows of foreign capital from Korean stocks and bonds rose to a four-year high in July, reflecting concerns about an estimated sovereign debt burden of 35 percent of GDP and a quarterly economic growth rate that lags even bankrupt Greece.
South Korea's Financial Services Commission dismissed the recent outflows this week, saying the levels weren't "alarming."