Seoul shares and won fall as Greek crisis saps confidence

[SEOUL] South Korean shares slid to a one-week low on Monday morning, and the won fell on the dollar, as Greece careened to the brink of defaulting on its debt after the latest round of talks with its international creditors failed to strike a deal.

The Korea Composite Stock Price Index (KOSPI) was down 1.5 per cent at 2,059.73 points as of 0248 GMT, after falling as low as 2,055.06 points, the weakest since June 22.

If the index maintains the decline by the close of trade, it will mark its sharpest loss since May 27. Losing shares outnumbered winners 686 to 148, highlighting the broad-based selloff amid a global downturn in equities.

"The call for a referendum is a kind of procedure to avert'substantial default'," said Rhoo Yong-seok, an analyst at Hyundai Securities, referring to Greece's surprise move to hold a referendum on bailout terms.

"Greece could default this week, but it is a 'technical default'. So, the effect would be limited in the local stock markets. We expect the KOSPI could fall 20 points to 50 points from last Friday's close until the day of referendum," Rhoo added.

Greece moved to check the growing strains on its crippled financial system on Sunday, closing its banks and imposing capital controls that brought the prospect of being forced out of the euro into plain sight.

LG Electronics Inc tumbled 3.8 per cent at 47,600 won on earnings woes. It fell as low as 47,500 won, the lowest in nearly 11 years. "The company's earnings for the second quarter would miss market expectations on declining television sales and its new smartphone sales," Daishin Securities said in a note to their clients.

Foreigners were set to end a three-day net buying streak by midday, offloading a net 40.7 billion won (S$49 million) worth of KOSPI shares.

The South Korean won was down 0.5 per cent at 1,122.6 per the dollar. The local currency touched a low of 1,127.9 in early trading, its weakest since March 18.

"The won slightly erased early falls on bargain-hunting as investors believed it had overshot," said Yuna Park, a foreign-exchange analyst at Dongbu Securities.

"The local currency could slide under 1,120 to 1,130 level till mid-July on continued concerns over Greece," Ms Park added.

September futures on three-year treasury bonds were up 0.10 points at 109.09.

REUTERS

Read more on the Greek crisis here.