South Korea’s financial market, like other emerging countries, was hit by Greek citizens’ rejection of a new bailout deal through a referendum over the weekend.

Foreign investors dumped local shares and the Korean won lost ground against major currencies such as the U.S. dollar and the Japanese yen amid the growing preference for safe assets.

The benchmark KOSPI dropped by 50.48 points, or 2.4 percent, from the previous trading session to close at 2,053.93. 

Foreigners’ net selling came to 286.4 billion won ($253.4 million) on the main bourse. While institutional investors were also net sellers at 217.3 billion won, only small investors net bought with 493.3 billion won.

The secondary KOSDAQ also showed a bearish position to close at 752.01, down 2.24 percent from a session before.

Samsung Electronics fell by 3 percent, or 38,000 won to close at 1.23 million won, and a large portion of stocks in the top 50 by market capitalization, including SK Hynix, Hyundai Motor and Amore Pacific, underwent price falls.

Foreign investors, who actively purchased the Korean stocks between February and May, became net sellers from early June, when concerns were growing over the possibility of Greece’s exit from the eurozone.

The U.S. dollar strengthened versus the Korean won, climbing 3.5 won to close at 1,126.5 won.

The Japanese currency rose by 6.9 won to trade at 919.87 won per 100 yen as of 3 p.m.

While the won also posted weakness against the Chinese yuan, it appreciated against the euro, which closed at 1,246.8 won, down 1.05 won from a session before.

An analyst from Daishin Securities said he expected local stocks and currency would stay at a bearish position for a certain period as more investors are set to relocate their stance to non-risky assets.

In contrast, NH Investment & Securities analyst Lee Chang-mok downplayed the negative impact of the Greek crises. He predicted that the effect of a possible Grexit would be restricted to Greece, adding that “foreign investors’ net selling of Korean stocks would not be massive (in the coming days or weeks).”

Local policymakers have said they are drawing up a contingency plan to prepare for the fallout if Greece were to exit from the eurozone.

The Finance Ministry had said the financial crisis faced by Athens would have limited effect on Korea, in light of the latest rate cut and an extra budget backed by the government.

But down the line, the country may feel the effects if European banks pull out their money amid continued chaos in Greece. Officials at the Bank of Korea also held an emergency meeting to discuss the possible fallout that could affect local markets.

The ministry said ― in close coordination with the Financial Services Commission, the Financial Supervisory Service and the Bank of Korea ― it plans on keeping close tabs on any increased volatility in the currency and bond markets. Officials agreed to take appropriate steps if needed.

By Kim Yon-se (kys@heraldcorp.com)