Overseas holdings reach 5-year high

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Overseas holdings reach 5-year high

Foreign holdings of Korean stocks in the small-cap Kosdaq market reached their highest level since the onset of the 2008 financial crisis, the stock market operator said yesterday.

According to the Korea Exchange (KRX), foreign investors held 5.04 percent of Kosdaq shares as of Tuesday, compared to 4.33 percent at the end of April 2012.

“Currently, foreigners’ holdings of Kosdaq shares are gaining and hovering at the 5 percent range,” said Han Beom-ho, an analyst at Shinhan Investment and Securities. “This is the highest level since March 2008, when Bear Stearns collapsed.”

In October 2005, foreign investors held as much as 7.49 percent of small cap stocks traded at Kosdaq. Holdings plunged to 3.08 percent at the end of 2008 and the 2 percent range at the end of 2009.

Foreign investors’ preference for Kosdaq over the Kospi was indicated by KRX data showing they bought a net 728.3 billion won ($645.4 million) worth of Kosdaq shares from January through Tuesday, while dumping a net 4.64 billion won in Kospi shares.

Through yesterday, Kosdaq restored about 540 points in four trading days. Kosdaq gained 1.77 percent to close at 544.3 yesterday, the highest one-day growth since December 27.

“Kospi, which restored 2,000-something points in March, is stagnant due to the Bank of Japan’s expanded quantitative easing, weak investor sentiment for exporters and foreigners’ dumping Korean shares,” said Kim Hyeong-ryeol, an analyst at Kyobo Securities. “Given that Kosdaq is composed of lots of growth stocks, this has attracted foreign investors and it serves as a shelter.”

By Kim Mi-ju [mijukim@joongang.co.kr]
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