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UK becomes biggest net buyer in S. Korean stock market in Nov.

An electric board at the Korea Exchange’s Seoul office in Yeouido shows the closing of the Kospi and Kosdaq on Dec. 2. (KRX)
An electric board at the Korea Exchange’s Seoul office in Yeouido shows the closing of the Kospi and Kosdaq on Dec. 2. (KRX)


Investors from the UK became the biggest net buyers in the South Korean stock market, as they bought shares worth 2.2 trillion won ($2.02 billion) in November, which accounted for nearly 36 percent of stocks purchased by foreign investors in the month, according to data Monday.

The data from the nation’s watchdog Financial Supervisory Service showed that foreign investors net purchased shares worth some 6.1 trillion won in November, the highest monthly purchase since September 2013, when foreign investors bought 8.3 trillion won.

They bought a net 5.8 trillion won in the nation’s main bourse Kospi and 268 billion won in the tech-heavy Kosdaq. By region, those from Europe purchased 4.5 trillion won while investors from North America bought 1.4 trillion won. Middle Eastern and Asian investors net bought 80 billion won and 500 million won of local stocks.

The list of big buyers from abroad continued with Americans purchasing a net 989 billion won in stocks.

The stocks purchased by UK investors in November marked a record high in value, surpassing 2 trillion won in shares bought by US investors in September 2013. As of end-November, Korean stocks owned by British investors were worth 53.9 trillion won, or 8 percent of all shares held by foreigners. The proportion was up from 7.6 percent in end-September.

US investors, on the other hand, saw their presence in the local market shrink from 41.8 percent to 41.4 percent during the same period.

Some market watchers said that money from the UK could be a short-term capital inflow and cause stock market fluctuations.

“Hedge funds based in tax havens outside the US are usually thought to operate in the UK and Europe,” said an FSS official. “Those funds tend to stay in the local stock market for a short term.”

Some analysts, on the other hand, opined that the UK capital inflow is linked to global hedge funds seeking long-term investment opportunities in diverse markets outside the US.

“Since the US market has been rallying to record levels in recent years, money from the UK and Europe tends to move to other markets like Korea for new opportunities,” said Jeong Myung-ji, an analyst at local brokerage Samsung Securities, forecasting that the recent capital inflow may not be short-term.

By Kim Young-won (wone0102@heraldcorp.com)
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