Local analysts optimistic that referendum on bailout unlikely to happen in Greece


Korea’s stock market ended slightly lower on Wednesday, erasing earlier losses sparked by the heightened concern that a Greek referendum might derail Europe’s rescue plan.

The benchmark KOSPI index closed down 11.62 points, or 0.61 percent, to 1,898.01. The tech-packed junior KOSDAQ eked out a gain of 1.13 points, or 0.23 percent, to end at 483.49.

The Korean won opened at 1,131 won in a reflection of shaky sentiment but gained ground in tandem with the stabilizing stock market to close at 1,121.8 won against the dollar, weakening by 7.8 won from Tuesday.

“The Greek government seems to have thrown in the referendum card to strengthen its negotiating power,” said Hong Soon-pyo, chief analyst at Daishin Securities. “Despite the widespread concerns, Europe would not let Greece slip into a messy default.”

Samsung Electronics Co., a bellwether stock for the Korean market and the country’s biggest provider of mobile handsets, lost 1.92 percent to end at 971,000 won. Samsung’s rival Apple Inc. said on Wednesday it would begin to sell its latest iPhone 4S on the Korean market on Nov. 11.

In contrast to the significant losses seen two months ago at the height of the eurozone debt crisis, the Korean financial markets held up its own pace in the face of a negative turn in Athens that some fear could undercut an $11 billion loan that Greece was to receive under the bailout deal.

Analysts said the Greece’s struggle is a bad piece of news, but investors seemed relatively optimistic about the stock market’s future course.

“The flight to safer assets is being witnessed throughout the global markets in the past two days, but the instability on the local bourse is likely to be short-lived and KOSPI is expected to safeguard the 1,800 level,” said Lee Kyung-soo at Shinyoung Securities.

Asian stocks weakened for a third day on Wednesday following a fresh bout of financial turmoil linked to the eurozone debt problem and Greece’s plan to hold a referendum.

Although the Korean market did not suffer a serious damage on Wednesday, the outlook remains rocky, analysts said.

Once the referendum gets implemented as planned, the fallout is likely to be far more vicious and far-reaching on the global financial market.

“Investors are betting that European leaders somehow resolve the referendum issue at the G20 meeting,” said Yoon Ji-ho, chief analyst at Hanwha Securities. “But if they fail to block it, the market volatility will certainly go up sharply.”

By Yang Sung-jin (insight@heraldcorp.com)