Seoul bourse ranks top in post-pandemic recovery

While global stock indices post continuing rallies as the negative impacts of COVID-19 are mitigated, Korea’s benchmark KOSPI showed the strongest resilience among them, as it logged a 35.2 percent increase from two months ago, when the index hit an 11-yearlow in mid-March.

The index finished trading at 1,457.64 points on March 19 amid a full-scale COVID-19 outbreak in the nation, the lowest point since July 17, 2009, when the index hit 1,440.10 from the shock from the global financial crisis.

As the KOSPI finished at 1,970.13 last Friday, the Korean stock index has risen by 35.2 percent over the two months. The increase is mainly attributed to investors’ flocking towards major IT stocks, such as game and internet-based companies as well as biopharmaceutical businesses.

Korea’s secondary KOSDAQ market logged an even more dramatic increase rate during the same period. The index hit 428.35 points on March 19, and rose steadily to 708.58 on last Friday, a 65.42 percent increase over the two months.

The recovery was the fastest among major global stock indices. Dow Jones, S&P 500, and Nasdaq indices each saw 31.54 percent, 32.09 percent and 35.91 percent jump from their lowest points in this year, respectively.

Germany’s DAX, U.K.’s FTSE 100 and France’s CAC40 also fell short of the increase rates of the Seoul bourses, as they logged 31.18 percent, 20.01 percent and 18.4 percent, respectively.

Among Asian markets, Japan’s Nikkei index rose by 23.17 percent as of last Friday, compared to its lowest points, while China’s Shanghai Composite index and Hong Kong’s Hang Seng only saw 5.77 percent and 5.69 percent increases.

Market observers explain that part of the reasons behind the Seoul bourses’ fast recovery is that they have strong IT and biopharma businesses like Kakao, Naver, NCSOFT and Samsung Biologics.

The list of the largest 15 companies by market capitalization saw its pecking order largely changed over the past few months.

Traditional manufacturing businesses like POSCO, Samsung C&T and Hyundai Motor saw their rankings fall, while biopharma company Samsung Biologics and internet-based companies like Naver and Kakao as well as game blue chips like NCSOFT have enjoyed soaring business profits and stock prices amid the aftershocks from COVID-19.

For instance, Korea’s major web portal site Naver’s weight in the total market capitalization of the KOSPI increased to 2.86 percent as of last Friday, from 2.06 percent logged at the start of this year. A recent report by Daishin Securities explained that Naver is one of the major beneficiary businesses from the coronavirus pandemic, as people have spent much more on online shopping recently. The amount of Naver Pay’s transactions rose by some 40 percent this year, compared to the same period last year.

Kakao is another IT-based company to have recently entered the coveted largest 10 company list by market cap.

The mobile messenger company’s previous rank at the start of this year was outside the top 20 companies.

Kim So-hye, analyst at Hanwha Securities, explained in her recent report that the firm’s operating profit of 88.2 billion won during the first quarter exceeded the market analysts’ previous estimate level by more than 20 percent. The firm’s revenues from advertising and messenger operation grew by 77 percent during the first quarter, compared to the same period last year.