South Korea’s benchmark Kospi hit a fresh high at Tuesday’s closing, with foreign and institutional investors returning to the market on hopes of strong corporate earnings in the first quarter.
The Kospi closed at 3,220.70, breaking its previous record and ending a three-month adjustment. It was only the second time the Kospi had closed above the 3,200-point threshold. The index closed at 3,208.99 points Jan. 25.
Despite increased market valuation pressure, foreigners and institutional investors hoisted the index by purchasing a net 326.2 billion won ($293.31 million) and 46.5 billion won, respectively. Conversely, retail investors turned net sellers and offloaded 389.8 billion won worth of shares.
As a result, the combined market capitalization of the Kospi’s 922 constituents soared to an all-time high of 2,246 trillion won at the closing bell. Compared with its market value on Jan. 25, the index is worth 34 trillion won more, according to the Korea Exchange.
The main bourse has also kept pace with the rallies of major stock markets in Group of 20 economies, posting a strong return rate of 11.3 percent as of April 19 since the beginning of the year. The Kospi’s growth rate this year was the sixth-fastest on the G-20 market list, outpacing the return rates of the S&P 500 and the Nikkei 225, the sole bourse operator’s data showed.
“The Kospi index was able to hit its fresh record high due to growing hopes for a global economic recovery and eased market volatility backed by stable bond markets. Foreign investors’ capital inflows into emerging nations amid speculation that exports would recover and strong corporate earnings in the first quarter also contributed to the market rally,” a KRX official said.
Market watchers also explained that the weakening of the US dollar against the Korean won had attracted foreign investors to the local market. Foreigners’ total net purchases this month came to some 2.93 trillion won so far, they said.
The local currency once traded as high as 1,142 won per dollar last month, but traded at 1,112.3 won per dollar Tuesday.
The tech-heavy Kosdaq also extended its winning streak for a third consecutive session, rising 2.42 points or 0.24 percent to 1,031.88 points at Tuesday’s closing bell. Retail investors bought a net 162 billion won, while foreign and institutional investors’ combined selloffs marked 33.3 billion won.
By Jie Ye-eun (email@example.com