Overseas investors reap huge profits from Kospi

Foreign investors have snapped up approximately 89 trillion won ($76.5 billion) in profits from the local main stock market so far this year, according to the local bourse operator yesterday.

The Korea Exchange said the market cap of the local shares held by foreigners as of last Thursday on the benchmark Kospi stood at 286.34 trillion won, up 120.54 trillion won, or 72.7 percent, from Dec. 30 2008, when the level was 165.80 trillion won.

The KRX said foreigners spent 31.59 trillion won on local shares this year, reaping a net profit of 88.96 trillion won.

This figure is higher than net profits in 2007, when the benchmark Kospi rose to a record high and surpassed the 2,000 point mark. At that time, foreigners made 70.71 trillion won in net profits.

Last year, as the global financial crisis was taking shape, they sold 33.63 trillion won of local shares and took a 108.87 trillion won loss.

“Foreigners took notice of local shares as the local companies were relatively less exposed to the global financial crisis,” said Hwang Geum-dan, an analyst with Samsung Securities.

The successful expansionary fiscal policies set up by the government also played a part in attracting foreigners to the local stock markets, Hwang said.

“Korea also benefited from the fiscal policies set by China, which also made the local market an attractive spot this year,” she said.

Foreigners’ preference for blue chips helped increase their profits, analysts said, as blue chips gained more than the stock market’s average.

Samsung Electronics was the favorite local stock, rising 74.72 percent this year. Hyundai Motor, the fourth favorite, rose 178.48 percent, trailing seventh-placed Hynix Semiconductor, which rose 211.19 percent.

The top 10 most popular stocks rose an average of 80.61 percent.

Every month this year through November except February foreigners bought more local stocks than they sold.

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