Foreigners drawn to Kospi

Foreign investors in search of profit have been increasing their investments in Korea as well as in other emerging markets in Asia.

According to the Korea Exchange (KRX) yesterday, from the beginning of this year through Nov. 6, foreign investors purchased a net 14.7 trillion won ($13.5 billion) of stocks on Seoul’s main bourse.

“This comes in stark contrast to last year, when foreign investors bought stocks from the benchmark Kospi amounting to 799.5 billion won,” said a KRX official.

As a result, Korea became the second-most-favored stock market in Asia among foreign investors this year after India.

This is significant considering that Korea’s main bourse has seen limited growth lately. It has expanded 5.61 percent since January, while many other Asian markets have seen double-digit growth.

The stock market in Thailand saw the sharpest growth of 26.9 percent, followed by the Philippines (25 percent) and India (21.8 percent).

“Foreign investors have been diverting their attention to Asia and emerging markets as advanced economies struggle from the global recession,” an analyst said.

Foreign investors this year have focused their stock buying on logistics and transportation, which includes automobiles and ships.

Of their total net purchases, foreign investors spent 6.3 trillion won, or 43 percent, on transportation shares. Financial shares were second at 2.8 trillion won, followed by chemicals (1.9 trillion won), and steel and metal (1.5 trillion won).

They dumped 711.2 billion won of food-related shares, more than any other sector. Most of their purchases were concentrated on midsize and large companies. Foreigners bought 14.1 trillion won worth of stocks of mid to large caps, but only 1.96 billion won of smaller companies.

By Lee Ho-jeong [ojlee82@joongang.co.kr]