South Korean stocks are expected to undergo further adjustments this week, weighed down by mounting eurozone uncertainties and their impact on the global economy, local analysts said.

The country’s key stock index, the KOSPI, closed at 1,782.46 on Friday, a drop of 7.03 percent or 134.67 points from a week earlier, mainly due to fears that Greece may exit the eurozone and concerns that the continent’s fiscal woes have started to spill over into the banking sector.

The plunge is significant because it comes on the heels of a 72.02 point loss tallied during trading in the second week of May, caused by anti-austerity election results in France and Greece.

The KOSPI tends to react to overseas developments affecting trade and investments, with the significant presence of foreign investors contributing to its volatility when the market loses ground.

“There is a pressing need to calm the market that panicked during the course of the week,” said Lee Seung-woo, an analyst at Daewoo Securities. He said, however, that because of the sharp drop in local stock prices, it may not fall as steeply in the new week.

Others said that the current situation taking place in Europe will not be resolved until mid June when Athens plans to hold another election that will determine its future in the 17-member eurozone.

Many analysts said there is a need to take a wait-and-see stance for the time being with investors advised not to increase their stock holdings.

Besides the developments taking place in Europe, market watchers said housing sales and durable goods orders in the United States to be released this week could influence the local stock market. 

(Yonhap News)