Seoul stocks may be exposed to volatility ahead of Greek bailout

South Korean stocks will likely be exposed to volatility ahead of crucial Greek parliamentary elections that will determine the future of the eurozone, local analysts said Saturday.

The country’s key stock index, the KOSPI, closed at 1,835.64 points on Friday, up just 0.06 percent or 1.13 points from a week earlier.

The weak gains came as the local bourse lost ground in the face of persistent debt and financial sector problems in the European Union and disappointments caused by the U.S. Federal Reserve and European Central Bank failing to announce concrete stimulus programs to fuel growth.

Local sources said that besides the Greek elections slated for June 17, investors will be affected by U.S. retail sales data and its consumer sentiment index due out next week.

The “surprise” announcement by China to cut its key interest rate and boost domestic economic growth is expected to exert positive influence on stock prices, particularly in steel and chemicals.

“There is a need for Europe to handle its problems before the market can regain normalcy,” said Lee Seung-woo, an analyst at

Daewoo Securities.

He pointed out that the KOSPI will be swayed mainly by European developments in the coming days with the United States and China exerting less influence.

This is because the upcoming Greek elections will determine if the embattled country can stay within the euro monetary union.

“If voters pick lawmakers that are more open to austerity measures, it will give a signal that the country does not want to exit the union, although if they pick parties opposed to spending cuts, Europe may be heading for a crisis leading to the break up of the 17-member eurozone,” Lee said.

The EU and the United States all want Greece to stay within the eurozone, since its exit could trigger a chain reaction that can

hurt countries such as Spain. 

(Yonhap News)