The South Korean stock market is expected to face fluctuations for the time being due to Britain's decision to leave the European Union, analysts said Saturday.
Hit by the Brexit rout, the country's benchmark stock index dived 3.1 percent to close at 1,925.24 points on Friday, the biggest daily loss in over four years.
"It will take some time for the market to stabilize, and investors should seek to manage their risks," said Lee Kyung-min, an analyst at Daishin Securities Co. "For now, it is hard to tell which shares will gain ground."
Kim Yu-kyum, an analyst at LIG Investment & Securities Co., echoed the view, and added that investors should take a wait-and-see stance in investing in overseas stock markets and observe countermeasures rolled out by other countries.
"The demand for riskier assets is expected to be weakened for the time being," Kim said, adding that investors should focus on the fundamental financial health of companies before buying their stocks.
Other analysts, however, said South Korean exporters may benefit from the Brexit as the Japanese yen gained ground following the event.
An appreciation of the yen against the U.S. dollar is considered beneficial for South Korean exporters as it usually makes Japanese goods pricier in the overseas markets.
The South Korean won traded at 1,152.58 won per 100 yen as of 3:00 p.m. Friday, down 62.75 won from the previous session. The greenback serves as the benchmark for the won-yen cross rate.
Analysts said South Korean carmakers will gain more price competitiveness overseas compared to Japanese rivals.
"Although we need to see the impact of the Brexit on the U.S. stock market, I believe carmakers will suffer less," said Hwang Sei-woon, a researcher at the Korea Capital Market Institute. (Yonhap)