"As a recent survey shows, all watchers expect a rate increase in June, it would not have much impact on the South Korean bourse," said Hankook Investment & Securities analyst Kim Dae-jun. "If a rate hike is uncertain, it could come as a problem."

According to a recent survey by Bloomberg, the probability of a US rate increase in June, which is reflected in the federal funds futures rate, is 100 percent.

Kim Sung-hwan, an analyst at Bookook Securities Co. echoed the view. "US rate hikes, which have been progressing gradually based on good economic and financial market conditions, are unlikely to crimp global risk appetite."

A US rate raise usually prompts foreign investors to leave stock markets in South Korea and other emerging economies in order to invest in American financial markets. It also makes the US dollar gain against the South Korean currency, rending the local bourse less attractive.

Some watchers said investors should focus on whether the Fed will decide to cut its assets rather than hike the key interest rate.

"The Fed will discuss whether to scale back its asset holdings for the first time in 10 years, which could lead to a strong dollar," said Kim Yong-koo, a researcher at Hana Investment & Securities Co. "There is a need to size up the possibility of asset reduction through its beige book."

Currently, the US central bank holds some $4.4 trillion worth of Treasurys and mortgage-backed securities, which it has bought to inject liquidity into the market since the 2007-08 financial crisis. (Yonhap)