Kospi hits 29-month high to exceed 2,800 points on foreign investment

The Kospi topped the 2,800 mark on Thursday as foreign investors flocked to domestic tech stocks.

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,807.63 points on Thursday, up 0.37 percent, or 10.30 points, from the previous trading session. [NEWS1]

Korean shares soared above the 2,800 mark on the main bourse for the first time in more than two years, driven by robust capital inflows from foreign investors into domestic tech stocks.

The Kospi rose 0.37 percent, or 10.30 points, to close at 2,807.63 on Thursday, extending its gains for a third day in a row. The benchmark index soared in mid-trading, reaching as high as 2,812.62 at around 2 p.m.

It marked the first time that the closing index exceeded the 2,800 threshold since January 2022.

Foreign investors drove the uptick, picking up shares worth a net 480.7 billion won ($346.8 million). Institutions net bought 167.3 billion won, while retail investors shed 575.7 billion won.

SK Innovation surged steeply, soaring 15.57 percent to 121,000 won following a media report that the company will merge with another major SK energy affiliate, SK E&S. The resulting entity is estimated to be worth over 100 trillion won in assets.

Riding on the back of strong chip demand and Nvidia's emergence as the largest public company in market cap the previous day, SK hynix rose 1.71 percent to close at a new high of 237,500 won. Samsung Electronics advanced 0.49 percent to 81,600 won.

Foreigners have been driving the recent rally in the Korean stock market, picking up shares worth a net 4.43 trillion won this month. Institutional investors, on the other hand, net sold 1.08 trillion won and retail investors offloaded 3.03 trillion won during the same period.

The buying spree was mainly focused on tech shares, with Samsung Electronics and SK hynix ranked first and second in the net purchase volume of foreign investors.

“The domestic stock market, despite some fluctuations, has been moving in sync with the trading volume of foreign investors,” noted Noh Dong-kil, an analyst at Shinhan Securities.

Noh projected that the foreign capital inflow would continue to remain favorable in the short term, partly due to the sluggish Chinese market, as the Korean stock market is in competition with the country in terms of foreign investments.

There is concern, however, of a potential overvaluation of tech stocks.

“SK hynix is estimated to be responsible for 3.3 percentage points of the Kospi's increase of around 4.1 percent this year [as of Wednesday],” said Kang Dae-seok, an analyst at Yuanta Securities, in a report published on Wednesday, adding that “if a price adjustment occurs in the United States due to an overheated market, the Korean market would also take a hit except for Samsung Electronics,” which has been performing relatively weakly compared to other tech stocks.

Meanwhile, the local currency closed at 1,384.60 won against the dollar, up 2.8 won from the previous session's closing rate.

Bond prices, which move inversely to yields, closed lower domestically. The yield on three-year government bonds rose 3.2 basis points to 3.195 percent, and the benchmark U.S. 10-year government bonds remained the same as U.S. stock markets were closed for the Juneteenth holiday.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]