As stock market logs new records in November, investors eye end of the year rally

30-Nov-2020 Intellasia | Koreaherald | 6:50 AM Print This Post

While South Korea’s main bourse has been hitting its all-time high, the country’s stock market also set new records in November, on the back of foreign investors’ extended buying spree. Following this month’s rally, both market watchers and investors are keeping a close watch on whether the market will sustain its momentum throughout the year.

According to the nation’s sole bourse operator Korea Exchange Sunday, the benchmark Kospi on Friday closed at 2,633.45, up 7.54 points or 0.29 percent from the previous session’s close. As the index surged by 16.1 percent this month, the benchmark logged another fresh record high.

Kospi had hit its all-time high of 2,617.76 on Tuesday, breaking the previous record of 2,598.19 set on January 29, 2018. But the highest mark was renewed consecutively on Thursday and Friday. With the change, the main bourse’s market capitalisation spiked to the largest record of 1,808 trillion won ($1.63 trillion).

The records came as 30 Kospi-listed stocks surged to their highest prices this month. Market kingpin Samsung Electronics’ stocks closed at 68,200 won on Friday, while shares of LG Chem reached 816,000 won, at Thursday’s closing bell. Samsung SDI and LG Household & Health Care also marked their new highs of 552,000 won and 1,607,000 won on Tuesday and November 12, respectively.

Market watchers largely attributed the recent market rally to offshore investors’ massive purchases, followed by the strong Korean won. While the local currency surged to an over 29-month high against the US greenback, closing at 1,103.2 won per dollar on Friday, foreigners raked some 7.43 trillion won worth local shares this month. It was the second largest after the figure seen in September, 2013 with nearly 7.64 trillion won.

After watching foreigners’ buying movement cautiously, retail investors began scooping up shares from Kospi market since Wednesday. Both investors’ influence-buying resulted the biggest trading volume of 1.4 billion shares worth some 21.8 trillion won on the day. With the trading amount of 18.1 trillion recorded from the tech-heavy Kosdaq market, the totalled trading value reached around 39.9 trillion won, an all-time high since September 8 this year that came to some 36.94 trillion won.

The series of top-notch records and hopes of COVID-19 vaccine development, eased political uncertainties over US presidential election, improved growth forecast and strong Korean won elevated investors’ expectation towards continuous market rally next month, market experts said.

“Local stock market may face a regulation period in the first week of December, however, it is likely to head to a rally as getting toward the end of this year on the back of high possibilities of President Trump’s noise being silent and another stimulus measures from the US and Europe in December,” said Chung Myoung-ji, an analyst at Samsung Securities.”

Citing the previous market data, some experts warned that there are some variables on the index’s further rise. Kospi had stronger performance at the beginning of the year than it was at the end. The main bourse kicked off bullish six times in January and ended lower six times at end of the year during 2010-2019, they added.

On top of that, foreign investors are likely to turn to profit-taking next month after the market surge this month. Retail investors are also expected to offload their shares due to stricter stock transfer tax rules. While local retail investors turned to net sellers for the twelfth consecutive year since 2008, they dumped 3.8 trillion won worth of shares in December last year.

“Investors need to watch over the upcoming announcements of economic indexes both from in and out Korea, so as listed firms’ final quarterly performance results of the year,” said Lee Kyung-min, an analyst at Daishin Securities. “Although the government’s major shareholder standards unchanged from 1 billion won, retail investors may cause a market variable since they already went on a speculative binge this year.”


Category: Korea

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