Korean stock funds draw $285 mn in a month on bargain hunting

Equity fund products for investment in Korean stocks have drawn about $285 million despite sluggish market on bargain-hunting demand.

According to Seoul-based financial data tracker FnGuide on Tuesday, assets in domestic funds investing in Korean equities reached 48.9 trillion won ($34.46 billion) as of Oct. 31, gaining 403.8 billion won from a month ago on rising appeal of undervalued Korean bourses after foreign investors turned long on Korean stocks.

Assets in bond funds however lost 1.55 trillion won during the period on growing concerns about the country’s debt market amid rate hikes and a ripple effect on other papers from the default of Legoland bonds guaranteed by a municipal government.

“With soured investor sentiment, outstanding balance in stock trading accounts and trade turnover have decreased in Korea, but net inflow to equity funds tracking stock indices have expanded due largely to rising appeal to offshore investors,” said Kim Hu-jeong, an analyst at Yuanta Securities Korea.

Assets in KODEX 200TR ETF tracking indices of Kospi 200TR expanded the most of 455.5 billion won in the recent month, followed by KODEX KOSDAQ150 Leverage and KODEX KOSDAQ150 ETFs tracking secondary Kosdaq index.

by Kim Geum-yi and Lee Ha-yeon