Shares end flat ahead of Spain bailout decision

South Korean stocks finished almost unchanged on Monday as investors sat on the sidelines ahead of Spain’s decision on a bailout plan proposed by the European Union, analysts said. The local currency lost ground against the U.S. dollar.

The benchmark Korea Composite Stock Price Index gained 1.07 points, or 0.05 percent, to close at 2,003.44. Trading volume was moderate at 476.8 million shares worth 4.19 trillion won ($3.75 billion), but decliners outstripped gainers 458 to 364.

“It’s most likely that Spain will accept the bailout package, and when they do that, it should give a spark for an upward momentum in the local stock market,” said Na Joong-hyuk, an analyst at IBK Securities Co.

Spain will have to unveil its economic reform plan by Thursday, which will include the decision of whether it will take the bailout package.

Although the rescue plan calls for some painful austerity measures, Spain won’t likely stand another chance, as its economy is practically insolvent, Na added.

“Until European leaders finally approve the Spain deal at the policy meeting next month, the KOSPI is predicted to move on the sidelines,” he said.

The Seoul bourse traded in negative terrain for most of the session, until it moved upwards as foreigners turned to buying from a selloff, snapping up a net 1.16 billion won.

Most shares closed lower, with financial and construction issues leading the decline. No. 2 lender KB Financial Group dipped 2.8 percent to 39,900 won and GS Engineering & Construction lost 2.46 percent to 79,200 won.

Large caps also finished bearish. Steelmaker POSCO lost 1.05 percent to 377,000 won and chemical maker LG Chem shed 0.76 percent to 327,000 won.(Yonhap News)