KOSPI dips over measures to boost undervalued stocks
Korean stocks fell nearly 1 percent, Monday, on the heels of the government’s announcement of a highly anticipated program aimed at boosting undervalued stocks that fell far short of expectations.
The benchmark KOSPI shed 20.62 points, or 0.77 percent, to close at 2,647.08 points, snapping a two-day winning streak.
Monday’s decline was extended from recurring fluctuations in the 2,600-point range mostly throughout February.
The fall, however, was noteworthy considering the government’s “Corporate Value-up Program” drew expectations that it would enliven the market after it briefly gave its outlines in mid-January and announced its plan to unveil details this month.
“The KOSPI, Monday, shows investors’ disappointment toward the program aimed at tackling the so-called ‘Korea discount,’” Daishin Securities analyst Lee Kyung-min said.
He said investors were hoping the financial regulator would intervene more actively in improving firms’ corporate governance — as their current governance is attributed as a reason for the “Korea discount,” or undervaluation of Korean stocks compared to their global peers.
“The Corporate Value-up Program instead is said to be focusing on the self-regulatory role of businesses, which is against market expectations,” he said.
Foreigners unloaded shares worth more than 76 billion won ($57.1 million) in the morning after increasingly flocking to invest in firms with low price-to-book ratios (PBR) for the past couple of weeks in anticipation of stock price recoveries.
Institutional investors also sold shares worth more than 17 billion won.
On the other hand, retail investors purchased over 88 billion won worth of shares.
Market bellwether Samsung
Electronics dipped 0.14 percent and Steel giant POSCO Holdings dropped 0.69 percent.
Many other top-selling shares retreated, too. These included those with a PBR below 1, which suggests a corresponding firm’s stock price is undervalued and was expected to give huge returns under the Corporate Value-up Program.
Top carmaker Hyundai Motor shed 2.05 percent, while its smaller affiliate Kia retreated 3.21 percent.
Banking giant KB Financial Group fell 5.02 percent, and its three other rivals — Shinhan, Hana and Woori — dropped 4.50 percent, 5.94 percent and 1.94 percent, respectively.
Bio giant Samsung Biologics went up 0.49 percent.
SK Securities analyst Cho Joonki said that firms with PBR below 1, such as carmakers and banking firms, “are likely to go down for the next couple of trading days.”
Meanwhile, junior bourse Kosdaq lost 0.13 percent to close at 867.40 points, following concerns that investors will pull out their money to invest in the KOSPI to reap more gains on the back of the Corporate Value-up Program.