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Kospi anticipated to hit all-time high within year on foreign buying

Experts recommend investors to keep eyes on growth value, ‘contactless’ biz sectors

Electronic signboards at the trading room of Hana Bank in Seoul show the benchmark Kospi closed at 2,553.50, up by 6.08 points or 0.24 percent, from the previous session’s close on Friday. (Yonhap)
Electronic signboards at the trading room of Hana Bank in Seoul show the benchmark Kospi closed at 2,553.50, up by 6.08 points or 0.24 percent, from the previous session’s close on Friday. (Yonhap)
As South Korea’s main bourse hit its yearly high for a third consecutive session on Friday, investors’ expectations have mounted for a fresh yearly high as early as within the year.

The Kospi closed at 2,553.50, up 6.08 points or 0.24 percent, from the previous session’s close. It began trading lower at 2,544.06 and experienced a roller-coaster trading session but ended strongly.

Retail investors and foreign investors net purchased 123.9 billion won ($111.21 million) and 102.2 billion won, respectively, in the market to hoist the index. Offshore investors also extended their buying spree for a 12th consecutive session.

In the meantime, the tech-heavy Kosdaq started off at 863.07, up 3.13 points or 0.36 percent from the previous session’s close. After going through ups and downs throughout the day, it marked 870.18 at the closing bell. Foreign and institutional investors net bought 139.8 billion won and 92.4 billion won, respectively.

Foreign investors scooped up massive amount of shares amid a strengthening Korean won and eased uncertainty about the US presidential election.

The index is now only 53.6 points off its all-time high of 2,607.10 recorded on Jan. 29, 2018.

According to Hyundai Motor Securities analyst Kim Joong-won, Kospi is expected to set a new record high in nearly three years, up to the 2,650-point mark either at the end of this year or early next year, thanks to foreigners’ continued net purchases.

“The Kospi surged over 15 percent from earlier this year. Buttressed by liquidity effects, it took about 38 months for the index to hit its all-time high after the 2008 global financial crisis. But the effect triggered by COVID-19 is likely to reduce time for the index to reach a new peak point,” Kim added.

Amid the rosy outlook of main bourse, local analysts said investors needed to pay attention to the sectors that offshore investors buy the most recently. While NH Investment & Securities analyst Noh Dong-kil noted industries such as semiconductors, secondary batteries and smartphone’s value chains, Hyundai Motor’s Kim also noticed secondary batteries along with the internet and biopharma sectors.

“Considering the possibility of continuous offshore investors’ capital inflow to the local market and net purchase of financial investment products to target dividend yields, increasing investment asset to large-cap stocks until the end of this year is a reasonable strategy for retail investors,” Noh added.

By Jie Ye-eun (yeeun@heraldcorp.com)
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