Retail investors come back to buy low on ex-dividend day

[Photo by Yonhap]

Retail investors net purchased a total of 1.67 trillion won ($1.32 billion) worth of shares in the South Korean stock market on Wednesday, hunting for bargains after institutional and foreign investors dumped high-dividend-paying stocks on this year’s ex-dividend date.

The benchmark Kospi closed at 2,280.45 on Wednesday, losing 2.24 percent from the previous session to end below the 2,300 mark for the first time in about two months. The secondary Kosdaq index was down 1.68 percent to close at 692.37.

Institutions and foreigners net sold 827.6 billion won and 303.1 billion won, respectively, on the day, which was this year’s ex-dividend date. Even after they sold their shares, they are eligible to receive dividend payments.

Financial experts advised that the ex-dividend day should be used as an opportunity to buy the dips especially blue-chip stocks, adding that individual investors should pay attention to good-performing stocks usually favored by institutions because end-of-year stock demand issues come to an end on the ex-dividend date.

Retail investors are advised to identify which industries or stocks institutions are buying next year as institutional investors mainly picked up stocks with solid corporate performance in 2017 and 2019 when retail investors massively sold off shares, said Lee Kyung-soo, an analyst at Hana Securities.