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Stocks outdo real estate in 2010

Stocks and equity funds were the most profitable investments in 2010 with the domestic securities market emerging strongly from the financial crisis, industry data showed.

Investors in real estate, however, suffered from lackluster yields as the property market remained sluggish despite government stimulus.

The benchmark KOSPI rose by 21 percent throughout 2010 to reach 2,051 points on Thursday, the last trading session of the year.

Total market capitalization reached $1.05 trillion, surpassing the $1 trillion mark for the first time since the end of 2007.

With the average earnings rate hovering around 20 percent, domestic equity funds outperformed offshore investment funds, whose returns averaged 7 percent.

South Korea’s key stock index again surpassed 2,000 points in mid-December. The KOSPI had peaked at an all-time high of 2,064.85 on Oct. 31, 2007, but at one point fell back by more than 1,000 points due to the global financial crisis.

Analysts attributed the market turnaround to strong inflows of foreign liquidity and a solid domestic recovery. The stronger local currency has also helped attract more foreign investors, they added.

Market analysts are generally expecting the trend to continue into this year, forecasting the KOSPI to reach 2,400 and the won to strengthen to around 1,110 won to the U.S. dollar.

The bullish market gave rise to greater riches for a number of stock holders.

The number of shareholders whose stocks were worth more than 1 trillion won ($892 million) rose from nine to 14 this year, according to Chaebul.com, an Internet-based corporate information provider.

The richest is Samsung Electronics chairman Lee Kun-hee, whose stock value topped 9.1 trillion won as of late last year. His wealth jumped from around 4.1 trillion won in late 2009 to more than 8 trillion won following Samsung Life Insurance’s public offering in May.

He was followed by Hyundai Motor Group chairman Chung Mong-koo with 6.5 trillion won and Chung Mong-joon, the largest stake holder of Hyundai Heavy Industries Co., with 3.61 trillion won.

New entries to the club of 1 trillion won in estimated stock assets include Kim Taek-jin, CEO of game venture NC Soft.

Contrary to the bullish stock market, the real estate sector struggled throughout 2010 despite the government’s deregulation and support to boost the market.

Most recently, the government loosened the debt-to-income ratio restriction in September to facilitate more home transactions.

Though signs of recovery have been seen in some parts of the country, the average housing sale price in Seoul increased by a mere 1.5 percent on-year in November, Kookmin Bank said in a report.

By Koh Young-aah (youngaah@heraldcorp.com)
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