Korean stocks and currency benefit from foreign capital escaping from China

[Provided by Yonhap]

Foreigners are snapping up Korean shares in full force this month in line with their exit from markets of Chinese influence, helping to push the main Kospi back above 2,400 and Korean won under 1,400 threshold versus the U.S. dollar for the first time in two months.

The Kospi was trading up 1.17 percent at 2,427.10 on Wednesday morning, breaking the 2,400 level for the first time since Sept. 15. The index has been on the rise since Oct. 31 except for one day.

Foreigners have helped lift the Korean stock market in recent days. They have bought 1.42 trillion won ($1 billion) worth of stocks so far this month. On Wednesday morning, they already net purchased more than 170 billion won worth Korean stocks. During the past month, offshore investors were net buyers except for two trading days. Thanks to the return of foreign capital, the dollar retreated to under 1,400 won this week for the first time since September.

Samsung Electronics Co. was foreigners’ top tip after they gobbled up 1.28 trillion won worth during the past month, followed by Samsung SDI Co. at 943.9 billion won, LG Energy Solution Ltd. at 683.2 billion won and SK Hynix Inc. at 388 billion won.

Market experts believe that the Korean stock market has been benefiting from the so-called “China run’’. Funds have been fleeing out of markets of Chinese influence on growing concerns of low economic growth and credit crunch under strongman Xi Jinping who recently entered a third term.

Among emerging stock markets, foreign selling has intensified for Greater China stocks while their selloffs have eased for Korea and other markets. About $2.8 billion fled the MSCI Emerging Markets ETF since the second half of this year. That’s in contrast with $100 billion that flowed into the MSCI Emerging Markets ex China Index during the same time.

“There’s growing sentiment among investors wanting to avoid the China market,’’ said Park Sang-hyun, an analyst at HI Investment & Securities Co. “Korean stocks that have become cheap from recent routs have become appealing to foreign investors looking for alternative investment.”

By Pulse