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Beating the market depends on Q3

Firms that improved on year outperformed Kospi, Kosdaq’s rise: KRX

Nov 22,2007
Among companies listed on Korea’s main Kospi stock exchange, those with better third quarters than a year ago saw their shares rise in value by far more than the market average this year, according to the Korea Exchange yesterday.
The local bourse operator said in a press release that the share prices of 284 Kospi-listed companies whose operating profits rose in the third quarter ended September from the third quarter last year, rose 68.8 percent this year until Tuesday, outperforming the market by 38.3 percentage points.
In terms of net profit, a total of 262 Kospi companies that saw a rise year-on-year for the three-month period also saw their stock prices pass the market average by 35.9 percentage points, the exchange said.
On the other hand, the stocks of companies with weaker on-year operating profit in the third quarter underperformed when compared with the market average. A total of 273 of these Kospi firms saw their share prices gain only 23.4 percent, 14.9 percentage points lower than the average.
Share prices of 259 companies that recorded lower net profits during the same period also advanced 23.4 percent.
The same pattern was shown in companies listed on the junior Kosdaq, the exchange said. Those with improved business performances year-on-year for the third quarter had their shares rise more than the market average, and vice versa for companies with poorer business performances.
Yeo Eun-jung, a research fellow specializing in stock markets at the Korea Institute of Finance, said the result shows local investors behaved somewhat reasonably, at least during the period.
“In reality, stock prices and the values of companies do not always move in the same direction when all their business records are considered,” Yeo said. “So we can say some investment on local stock markets was conducted efficiently for the third quarter. But it’s just one quarter’s result and it’s still to be seen whether local investors are adopting the reasonable market approach used by investors in advanced markets.”


By Moon Gwang-lip Staff Writer [joe@joongang.co.kr]


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