Seoul stocks ended flat amid Brexit turmoil

Partly relieved by global financial authorities' plans to take additional monetary easing steps to counter market turmoil, institutional investors scooped up local stocks worth over 400 billion won, analysts said. 

However, foreigners and individuals sold a combined 450 billion won worth of stocks, keeping the index from rebounding further from Friday's 3.09 percent tumble.

"After Britons voted to leave the EU last week, global financial authorities, such as the European Central Bank and the Bank of Japan, said they will take additional monetary easing steps to tame market volatility if their markets turn wild," Mirae Asset Daewoo analyst Ko Seung-hee said.

"Investors appear to have received initial relief from their plans, but the market will remain volatile at least for the coming weeks." 

Global stock markets were shocked by Britain's unprecedented and unexpected decision last week to exit from the single biggest 28-nation economic bloc. On Friday, Brexit wiped more than $2.5 trillion from global equity in terms of market values, with the Dow Jones industrial average plunging 3.4 percent.

The global financial markets are widely expected to suffer increased volatility for the time being as uncertainty sparked by Britain's EU exit will make investors more risk averse and prefer safer assets, such as gold, the dollar and the yen, analysts said.

They said the country's main stock index may flirt with the 1,830-point level this week if foreigners continue to dump local stocks.

"There will be more selling (by foreigners) in the coming weeks as they seek more hedging to protect their assets by exiting from emerging markets, including Korea," Hana Financial Investment Co. economist Soh Jae-yong said.

Korea's financial authorities held an emergency meeting earlier in the day to discuss measures on buffering the impact from Brexit on the local financial markets, expressing concerns about additional departures of EU member countries from the bloc and ensuing volatility.

But they expected a limited impact from the Brexit decision on the domestic market due to the relatively small trade volume and investment between Britain and Korea.

"The authorities have already devised manuals for dealing with Brexit woes, which might include a crash in the stock market and a rise in the outflow of foreign capital," Financial Services Commission Chairman Yim Jong-yong said.

"They will also come up with market stabilization measures in advance and immediately take necessary measures should market concerns exceed a certain level."

Bank of Korea Governor Lee Ju-yeol also sought to calm market players calling the current volatility "short-term" changes in the domestic market.
Korea is relatively more exposed to a negative impact from Brexit when it comes to its financial market as well as its real economy. But the current market conditions indicate that price fluctuations have already eased from those of last week, Lee said.

"The central bank will maintain a high level of market liquidity in case of possible signs of massive capital outflow," he said. Major decliners narrowed their earlier losses.

Market bellwether Samsung Electronics Co. inched down 0.14 percent to 1,398,000 won, No. 1 chemical company LG Chem Ltd. fell 0.62 percent at 238,500 won, and No. 1 retail bank KB Financial Group declined 2.41 percent to 32,350 won.

Among gainers, top automaker Hyundai Motor Co. rose 1.43 percent to 141,500 won, dominant tobacco company KT&G Corp. climbed 2.01 percent to 127,000 won, and No. 1 mobile carrier SK Telecom Co. gained 1.44 percent to 211,500 won on bargain hunting.

The local currency was trading at 1,182.30 won against the U.S.dollar, down 2.40 won from the previous session's close. Bond prices, which move inversely to yields, hit fresh record highs on continued flights to safer assets amid increased market uncertainty. The yield on three-year Treasurys fell 1.3 basis points to a fresh record low of 1.236 percent and the return on the
benchmark five-year government bond shed 1.5 basis points at a historic low of 1.289 percent. (Yonhap)