S.Korean financial markets hit hardest on political turmoil in Libya (2)

20:57, February 22, 2011      

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The country's stock market fell sharply as rising oil prices in benchmark Dubai crude will likely add cost burden to the domestic economy, analysts said.

"Civil unrest in Libya brought about sharp gain in Dubai oil prices, threatening South Korean economy, the world's fifth largest oil importer," Kang Hyun-gie, an analyst at Solomon Investment & Securities in Seoul, said by phone.

"The KOSPI dropped on concerns over South Korea's economic fundamentals, likely to be hit by rising oil prices from geopolitical uncertainties surrounding Libya," Kwak Joong-bo, a Seoul-based analyst at Samsung Securities, told Xinhua.

The uncertainties over political instability in the Middle East is likely to be eased in the short term, Im Jeong-jae, a Seoul- based fund manager at Shinhan BNP Paribas Asset Management, said in a phone interview.

"Even though it remains to be seen whether the political turmoil in the Middle East will spill over across the African region, it is less likely for the regional tensions to continue for a long time," Im said. "Assuming that geopolitical risks are eased in the region, Brent and Dubai crude prices, which have surged during the short period, would converge to Western Texas Intermediate (WTI) in the end."

WTI oil for March delivery on the New York Mercantile Exchange finished at 86.20 dollars per barrel on Feb. 18, while Brent crude closed at 102.52 dollars a barrel last weekend.

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