Retail investor buying, foreign selling hit fresh highs on Kospi
Byeong-Hun Yang and Yun-Sang Ko
Nov 30, 2020 (Gmt+09:00)
Foreign investors sold a record volume of shares on South Korea’s main bourse on Nov. 30, triggering a sharp fall in the main stock index, while individual investors scooped up a record amount, betting on further market gains in coming months.
The main Kospi index fell 1.6% to close at 2,591.34 points on Monday, after hitting an all-time high in the previous session, as foreigners sold a net 2.4 trillion won ($2.2 billion) worth of stocks, the largest amount on record.
By contrast, retail investors picked up a record amount of 2.2 trillion won, providing support for the local market, which has long been swayed by foreign investors’ trading patterns. Institutions purchased a net 202 billion won.
Monday’s heavy foreign selling was triggered by the changes in the MSCI Emerging Market Indices. As a result of the changes, South Korea’s weight has fallen to 11.7% from 12.0%, prompting global investors to reduce their Korean shareholdings. Instead, global index provider MSCI newly added Kuwait to its emerging market category.
"The Kospi has risen too fast in a short period of time. Today’s fall is more like a technical correction triggered by global passive funds tracking major indices of key markets,” said Jung Yeon-woo, head of research at Daishin Securities.
Individual investors, however, have aggressively purchased local stocks believing that the Kospi, trapped in a boxed range for years, will break above the current ceiling to reach 3,000 points as early as next year, analysts said.