Foreigners to return net buyers after extending sell-offs

(Yonhap)

Foreign investors remained net sellers of South Korean stocks last month, extending their selling spree for a fourth consecutive month, but some market experts have a positive outlook on their return.

“Foreigners’ net purchase has lately occurred to Kospi since the index is still relatively undervalued (compared to other key indexes) amid growing recovery hopes for global economy and business profits,” Daishin Securities analyst Lee Kyung-min wrote in a report Monday.

According to the local brokerage, foreign investors purchased a net 2.17 trillion won ($1.93 billion) worth of local stocks solely from the beginning of this month to Friday. The country’s key index also rose to the 3,130-point level during the period.

“With their strong expectations, Kospi market’s structure has newly become foreigners’ attractive investment factor,” Lee wrote. “Sectors such as IT, new renewable energy based manufacturing and internet are mainly positioned as the large-cap stocks on the Kospi market.”

While the country is set to resume short selling activities from May 3, the analyst further forecast that the global market liquidity with active investment patterns is likely to flow into the local stock market ahead of next month.

Starting in December last year, foreigners sold a net 3.51 trillion won in local stocks in March, up from net selling of 3.24 trillion won marked a month earlier, according to data from the Financial Supervisory Service.

They unloaded a net 3.18 trillion won from the nation’s main bourse Kospi market, and 330 billion won from the tech-heavy Kosdaq market, the data showed.

Investors from Asia and the Americas marked 3.7 trillion won and 1 trillion won, respectively, while those from Europe and the Middle East bought a net 1.13 trillion won and 700 billion won each.

As of end-March, local stocks held by offshore investors came to 805.3 trillion won, up 7.8 trillion won from the previous month, amid an increase in the value of stocks. It accounted for 31.1 percent of the country’s total market capitalization.

By Jie Ye-eun (yeeun@heraldcorp.com)

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