Foreign investors return to Seoul bourse

Foreign investors who ditched the nation’s stock market last year are returning to Korea.

According to the Korea Exchange, foreigners bought 865.2 billion won ($770.1 million) worth of stocks in the benchmark KOSPI between Jan. 7 and 14, reflecting prevailing perceptions that Seoul stocks are now underrated.

Thanks to their rush to Seoul stocks, the KOSPI index climbed over 3 percent from 2010.25 points to 2064.52 in the period. Foreign investors net-bought Seoul shares Monday despite an 11.05 points fall in the benchmark index.

Their return was also evident in December.

According to the Financial Supervisory Service, Monday, foreign investors, who led the nation’s sluggish stock market in October and November via massive net sale, posted a 116 billion won net purchase in Seoul bourse last month. They also bought 1.47 trillion won worth of public bonds here in the period.

They currently own 509.7 trillion won worth of listed shares, accounting for 31.3 percent of total market capitalization in the nation’s stock market.

Of the total market capitalization, Americans account for 42.8 percent by owning 218.3 trillion won worth of stocks while Europeans occupy 28.5 percent with 145.4 trillion won. Asians and Middle Easterners also own 61.6 trillion won and 18.4 trillion won, respectively, each accounting for 12.1 percent and 3.6 percent.

Last month, foreigners also posted 700 billion won and 300 billion won worth of net purchases in the Hong Kong and Paris bourse while shedding 500 billion won and 400 billion won worth of shares in Cayman Islands and Saudi Arabia, respectively.

“Uncertainty in the global slowdown and disappointing earnings over the last two quarters have already been reflected in stock prices,” said IBK Securities Research Center in a report.

“Federal Reserve Chairman Jerome Powell’s recent comment that he will take an accommodative rates stance reflecting the current economic situation led the KOSPI rally last week.”

Meritz Securities analyst Yoon Yeo-sam also displayed his expectations for a further rally.

“We said the rally would come after the second quarter, but the market, as always it does, moved faster than anticipated,” Yoon said.

“Talks between the U.S. and China are now on track. Powell also said he will be more patient in raising rates. Chances are open for further rally.”

However, the tech-heavy Kosdaq market suffered a setback for the first two weeks of 2019, with foreign investors dumping shares worth around 150 billion won.