KOSPI hit 15-month high on upbeat sentiment by foreign investors

By Lee Youkyung
SEOUL, Sept. 22 (Yonhap) -- Market analysts were upbeat about a sustained bull
run in local equities as Seoul shares closed above the 1700-mark Tuesday for the
first time in 15 months on massive foreign buying.
The benchmark Korea Composite Stock Price Index (KOSPI) closed 1.38 percent
higher at 1718.88, the highest close since June 26 last year. It was also the
first time in 15 months that the key index ended above the 1700 mark.
Market experts ascribed the present bull market to foreign investors' hefty
purchase of local shares.
"Foreigners sought to buy more shares in information technology, automotive,
banks and securities, the key sectors that led the bull market in the past
months," said Lee Jae-man, an analyst at Tong Yang Securities. "They are market
leaders with the largest capital in the market, exercising huge influence on the
main index."
Foreign investors bought a net 483.2-billion won (US$401.4 million) worth of
local shares during the Tuesday session, sharply up from Monday when their net
buying was worth 187.3-billion won. They snapped up local shares worth a net 1.4
trillion won on Sept. 18, the last trading day before South Korea officially
joined the FTSE Group's advanced market category.
Analysts said a burgeoning economic recovery and positive signs in the corporate
sector fueled hefty buying by foreign investors, along with the strengthening
local currency.
"The South Korean economy demonstrated a fast and strong recovery pace, and its
corporate sector is rebounding faster than any other global market," said Lee
Young-won, an analyst at Prudential Investment & Securities. "Recent rallies in
local stock markets reflect these trends."
The FTSE Group's promotion of the South Korean market, which became the first
advanced emerging country to be upgraded onto the global index provider's list of
the most investor-friendly markets, also played a role in the strong showing,
analysts said.
"Foreign buying began in March and has continued throughout, so it is not a new
trend at the moment, but the FTSE's upgrade was a recent boon to the market," Lee
Jae-man said.
Analysts remained cautious about predicting the sustainability of the rally in
the future, as a weakening dollar and a possible interest rate hike linger as
factors that could weigh down on the key index's rise.
"Though a modest change in currency rate could drive further foreign buying, a
steep appreciation of the won to the 1100-level against the greenback could hurt
exporters' competitiveness," said Lee Young-won.
But most local analysts anticipated that the KOSPI still has room to rise further.
"Our firm expects the KOSPI to touch the 1800-level at the end of the year, so we
are not giving too much meaning to breaking the 1700 mark," Lee Jae-man said.
"But unlike the lengthy correction periods that the KOSPI underwent as it moved
from the 1500 mark to 1600 mark, it took a much shorter time to jump from the
1600 to 1700 level," he added. "This reflects a positive situation overall."
ylee@yna.co.kr
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