Growing fear over the omicron variant and sooner-than-expected tapering by the US Fed are weighing on the South Korean stock market, analysts said Wednesday, although some say it will take longer to gauge how the impact will play out here.

The nation’s main bourse Kospi hit the lowest mark of the year on Tuesday, as short sellers dumped about 1 trillion won ($848 million) on the Kospi and the junior, tech-heavy Kosdaq in their second largest sell-off this year.

Stocks rebounded Wednesday afternoon on strong exports data and positive investor sentiment, but the rebound momentum is not strong enough, experts said. The Kospi closed at 2,899.72, gaining 2.14 percent from the previous session.

“Volatility is bubbling up and I don’t see the momentum gaining any more traction for the time being,” said Yoon Ji-ho, head of research at eBest Investment & Securities. Large-cap shares could do better to prop up the Kospi, according to Yoon.

“We won’t see a rally like before when it hit a record high months ago,” said Kim Hak-kyun, head of research at Shinyoung Securities, referring to July when the main index surpassed 3,300 for the first time amid bets on key exports like semiconductors.

Local brokerages predicted that the Kospi may go under 2,800 by December, and that the market slump could go on for the next two weeks, while health authorities seek to establish if the new omicron variant calls for stronger, economically damaging steps to curb the spread.

US Federal Reserve Chairman Jerome Powell’s hawkish comments on ending bond purchases a few months sooner than expected added to the gloomy economic outlook as rate hike speculation immediately dragged down both US and European stocks.

At the Senate Banking Committee, Powell said he dropped the word “transitory” to describe high inflation, adding the US central bank will discuss tapering at its next meeting on Dec. 14-15.

Oh Hyun-seok, head of research at Samsung Securities, said the reason the local market rebounded while world shares dipped was investors here had known not to “overreact” to the Fed’s transition. In November, the US central bank said it will complete its asset-purchase program in mid-2022.

“The Fed is important but the priority is the omicron variant, which we don’t know anything about yet. We need a week or two to really evaluate the impact it will have on the market,” he said.

Kim Young-hwan, a market strategist at NH Investment & Securities, said a sudden, huge Kospi fall was not likely.

“The worst case scenario is that the new variant is not only more contagious but more lethal and the vaccines we have are not enough to protect ourselves,” Kim said, noting all of the conditions have to be met for stocks to take a hit.

“That’s why it’s wait and see for now,” Kim added.