This week, foreigners offloaded a net 268.5 billion won ($221.8 million) worth of local shares, while institutions bought a net 134.1 billion won. Individuals scooped up a net 53.8 billion won.

Kiwoom Securities analyst Seo Sang-young said the direction of the local market next week will largely depend on US Fed Chairman Jerome Powell's message at the Jackson Hole meeting set to end Saturday (US time).

"Should (Powell) maintain his stance that the US rate cut in July should serve as insurance as he said on July 31, the market would interpret it as a hawkish view that undermines the possibility of a rate cut in September, in which case the volatility may expand," Seo said.

Many, however, believe the US Fed chair will likely hint at a rate reduction in the near future, citing the recent escalation of the US-China trade dispute that followed the first US rate cut in more than a decade last month.

"In such case, the local stock market will be expected to greatly rise," Seo said. (Yonhap)