Kospi can’t get above 2,000 mark
The benchmark Kospi on Friday retreated 11.96 points or 0.6 percent to close at 1,972.34. On Thursday the market edged close to 2,000 during the day as foreign investors bought more than 1 trillion won worth of shares. With optimism spreading widely in the market, there were growing expectations that the Kospi would have no trouble breaking the 2,000 mark Friday.
However, institutional investors’ unloading of shares prevented that, particularly asset management companies.
According to the Korea Financial Investment Association, more than 2.7 trillion won worth of equity left the main bourse since Jan. 18 when the Kospi edged closed to 1,900, excluding the exchange-traded fund (ETF).
Institutional investors’ hope to recover the losses they have suffered since the stock market plunged below 2,000 in August.
The last time the Kospi was traded above 2,000 was on Aug. 4 when it closed at 2,018.47. The following day the market plummeted 3.7 percent, losing more than 74 points to close at 1,943.75 after Standard & Poor’s downgraded the U.S.’s credit rating. The market has been struggling since, due to the sovereign debt crisis in Europe and the downgrading by credit agencies of several European countries including Greece, Italy, Spain and France.
Although the Kospi has traded above the 1,900 mark since August, this was its first time near 2,000.
“With the fund investment profit rate improving thanks to the recent bullish momentum in the stock market, more money is leaving,” said a high ranking official at an asset management firm.
Some market observers speculate that the Kospi could rise above the 2,000 mark at the beginning of this week thanks to Friday’s positive jobs report in the U.S.
The news helped the Dow Jones Industrial Average gain 1.23 percent while the Nasdaq rose 1.61 percent.
However, such optimism may not last throughout the week and the Kospi may fall below 2,000 as an option expiration on Thursday could cut foreign purchases while institutional investors continue to sell off their holdings.
By Ko Ran, Lee Ho-jeong [firstname.lastname@example.org]
More in Economy
Better to give property than to receive a big tax bill
Border restrictions drastically cut North Korea's trade
Central bank holds rates steady, adjusts up GDP forecast
Restaurant coupons to make a comeback as an app