Seoul shares to await Britain's referendum next week

South Korean shares are expected to be swayed by the result of Britain's referendum on its European Union membership as the historic vote will determine the overall sentiment in the global financial market, analysts said Saturday.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 1,953.4 points on Friday, losing 3.18 percent from a week ago.

It was the biggest weekly loss since mid-February.

The index slipped five consecutive days and slightly rose on Friday on bargain hunting as investors spooked over growing uncertainties in the global economy.

Concerns over Britain's exit from the EU, known as Brexit, prevailed the local market all week, overshadowing central bank meetings in the United States and Japan. The U.S. Federal Reserve stood pat on the interest rate on Wednesday, striking a cautious note on the global economy.

Throughout the week, foreigners sold a net 335 billion won

(US$285.5 million), and institutions dumped a net 461.6 billion won.

Tech and logistics shares outperformed the market, while bio and health care stocks were at bottom.

Investors will closely watch upcoming public polls after campaigning around Britain's European Union membership vote was suspended following the murder of a British lawmaker.

A pro-EU politician Jo Cox was shot dead on the street in northern England on Thursday, prompting investors to digest the implication whether it could unite "remaining" groups in the final week before the historic vote on June 23.

Analysts warned Britain's departure from the 28-country bloc, albeit low probability, could roil the financial market and have major consequences for trade, economy and migration in Britain and elsewhere. 

"Even if a leave vote is passed, Britain won't quit EU membership immediately because it may take longer than two years in practice depending on how negotiations pan out," Kim Byung-yeon, an analyst at NH Investment & Securities, said.

"The global equity market is expected to tumble following the referendum, but it will recover if Britain promptly rolls out support measures. Such a result, however, could spill into other European nations, putting downward pressure on the financial market in the long run." (Yonhap)