South Korea's outbreak of a deadly virus has triggered concerns over the economy, but analysts seem to be singing a different tune about the stock market, saying the recent selloff may be overdone.
"The Middle East Respiratory Syndrome (MERS) is dangerous, but I think investors are overreacting, especially people from overseas who don't know the reality in South Korea," Daewoo Securities' analyst Regina Hahm told CNBC by phone.
The benchmark Kospi index has declined 3.36 percent since the country reported its first confirmed MERS case on May 20. Selling intensified this week as public alarm grew in tandem with the rising number of confirmed cases in Asia's fourth-largest economy. On Thursday, South Korea reported 14 new diagnoses, bringing the total number of infections to 122, the highest rate outside Saudi Arabia. Nine people have died so far.
Within the Seoul bourse, retail and tourism-related counters bore the brunt of the selloff amid concerns MERS would keep travelers, especially big-spending Chinese tourists, away from the country. Spending by mainland holidaymakers has been a key driver of domestic consumption in recent years, with visitor arrivals from China to South Korea hitting a record high of 6 million last year.
Shares of Hanatour Service plunged 2.5 percent, widening the travel agency's declines since May 20 to 14 percent.