[THE INVESTOR] Foreign investors net purchased nearly 3 trillion won (US$2.66 billion) worth of South Korean stocks on the main bourse this month so far, data showed on Jan. 27, sparking interest in the sustainability of the current bear market rally.
The foreign net purchase volume on the Kospi through Jan. 25 amounted to 2.9 trillion won, climbing to a 15-month high.
Overseas investors’ recent buying spree has been fueling the latest rally on the Kospi, analysts say, with the Kospi closing at 2,177.73 on Jan. 25, rising 136.69 points or 6.7 percent overall since stock trading for 2019 kicked off at the beginning of the month. The figure marked the highest closing price since Oct. 10, 2018.
Furthermore, foreign investors net purchased 813.9 billion won worth of stocks on Jan. 25 alone, according to the Korea Exchange, double the amount they purchased throughout the previous trading day.
Over the same near-month period, individuals and institutions net sold 2.7 trillion won and 171.5 billion won, respectively.
Tech giant Samsung Electronics ranked first in terms of popularity among foreign investors, with their net purchases reaching 1.3 trillion won. SK hynix, the world’s second-largest memory chip provider, followed with 719.5 billion won, reflecting investors’ unflagging interest in the nation’s semiconductor industry.
“On alleviated concerns over the US-China trade dispute, foreign capital has been flowing into the South Korean stock market, which boasts an attractive stock valuation at the moment,” said Ha In-hwan, an expert at SK Securities, in a note Sunday.
Though the market seems to be on the road to recovery, backed by a hopeful mood surrounding the US-China dispute, experts noted the rally will continue depending on the result of the Federal Open Market Committee meeting slated for the end of the month, coupled with further developments in the US-China trade dispute.
“If the possibility of a rate hike adjustment can be reaffirmed through the FOMC meeting, then (the meeting) would work as a positive factor in terms of controlling risky assets,” said Lee Kyung-min, an expert at Daeshin Securities.
“Though it is unlikely that the US-China trade dispute will be resolved soon, the positive sentiment surrounding the purchase of shares in emerging markets is expected to last, if the upcoming Washington-Beijing meeting succeeds in giving the impression that the negotiations will continue,” he added, highlighting the meeting between the two economic giants scheduled later this week.
The South Korean stock market has continued a bear market rally for weeks, with strong demand from overseas investors amid an overall sluggish market.
By Jung Min-kyung/The Korea Herald (email@example.com)