Old Economy Shows It's Got Some Vigor

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Old Economy Shows It's Got Some Vigor

The Korea Stock Exchange is gaining strength over its upstart rival. Investors are shifting to the main stock market, and the exchange has begun outdoing the Kosdaq market in daily trading volume and turnover.

Because investors are belatedly looking at companies' earnings performance rather than vague growth potential, the main exchange, with its "old economy" blue-chip stocks, will likely lead the next bull run, analysts said.

On Monday, the Korea Composite Stock Price Index, or Kospi, surged to a four-month high of 618.96, up 3.1 percent from Friday. It faced resistance at around 610 points in early trading, but broke through the wall on increased foreign and program buying. Stocks preferred by individual retail investors also rallied, helping the index rise further.

By comparison, the Kosdaq market got off to a strong start, only to end with just a 0.9 percent rise. Most of the early gains were wiped out by retail investors' shift to construction and securities issues on the main exchange, analysts said.

The Korea Stock Exchange's daily trading volume has surpassed that of the Kosdaq since May 9. The Kospi has also outperformed the Kosdaq composite index since Tuesday, losing less than the tech-heavy index in bearish sessions and gaining more in bullish trading.

Analysts said that the recent rally, which started in mid-April, is based on growing expectations of an economic recovery and improved corporate earnings. In that respect, the Korea Stock Exchange is in a better position than the Kosdaq. While the economy is expected to hit bottom between the third quarter and early next year, the information technology sector's bottom is forecast to occur three to six months later.



by Rah Hyeon-chul

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