Seoul stocks bounce back on aid package

By Kim Jae-kyoung

Staff reporter

Seoul stocks bounced back Monday on the back of eased fears over another financial crisis following Europe's joint announcement of a bailout package to support ailing European countries saddled with huge debts, such as Greece and Portugal.

The benchmark KOSPI jumped 30.13 points, or 1.83 percent, to close at 1,677.63, while the tech-heavy Kosdaq rose 12.45 points, or 2.49 percent, to finish at 512.16. The won also gained ground against the greenback, ending at 1,132.1 won from 1,155.4 won Friday.

The upturn was mainly due to a monster rescue package by the European Union. On Sunday, European Union ministers agreed to supply as much as 750 billion euros ($962 billion) in aid to countries battered by sovereign debt concerns.

However, it is still unclear whether Asian markets, including Korea, will show a V-shaped rebound as the rescue package is unlikely to calm market fears anytime soon. The local market is expected to undergo a rollercoaster ride for the time being, depending on how the European crisis unfolds down the road.

"Risky assets are poised for a bounce following last week's steep sell-off. The sustainability of any bounce depends on whether the package reverses the consensus view that drove last week's selling," ING Group senior Asia economist Tim Condon said.

The future course of the local market depends heavily on foreign investors, who led the market crash with record selling last Friday. Foreigners were still net sellers of Seoul stocks Monday, unloading a net 366 billion won worth of shares on the main bourse.

Market analysts said that although external woes are likely to sway the local market in the short term, the impact will be limited.

"Europe's fiscal and debt stresses are unlikely to happen here. But Asia is not immune to the repercussions of the European fallout," Credit Swisse analyst Joseph Lau wrote in a research note.

"We do not consider Asian countries, excluding Japan, at risk of facing direct fiscal and external debt stresses similar to those that plague Europe," he added. "We think that Asian economies' fiscal and external debt fundamentals are less vulnerable and that the risk of similar budgetary and financing strains is lower."

Most shares gained ground, with financial advances standing out. KB Financial Group jumped 5.35 percent to 51,200 won, and its rival Woori Finance Holdings soared 8.44 percent to 16,700 won.

Market leader Samsung Electronics rose 1.13 percent to 803,000 won, and chip giant Hynix Semiconductor added 2.09 percent to close at 26,900 won.