Four-month foreign stock-buying streak at $10B

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Four-month foreign stock-buying streak at $10B

Largely owing to expectations for a new economic stimulus plan that have been building since early June, foreign investors bought about 10 trillion won ($10 billion) worth of Korean shares over the past four months.

According to a report by the Financial Supervisory Service (FSS) yesterday, foreigners were net purchasers of local shares for the fourth consecutive month in July, snapping up 3.6 trillion won.

Foreigners were net buyers of 3.8 trillion won worth of shares in April, 1.45 trillion won in May and 700 billion won in June.

As of July 31, foreign investors owned a total of 460.3 trillion won in local shares, accounting for 33.1 percent of total market capitalization.

The pickup in foreign investment last month can be interpreted as a sign of foreign enthusiasm for the government’s second economic team led by the new finance minister, Choi Kyung-hwan.

The Korean stock market has rallied since the minister’s nomination.

Since mid-July, the benchmark Kospi index has risen about 3.5 percent, mostly in response to the government’s determination to aggressively employ fiscal and monetary policies.

The government last month announced it will pour up to 41 trillion won into fiscal and financial measures to revive the domestic economy.

Local analysts forecast the current buying spree will continue for the time being.

“Based on their expectations for recovery of the Korean economy, it is projected foreign investors will keep buying Korean shares,” said Seo Myung-chan, a market analyst at Kiwoom Securities.

However, foreigners were net sellers of 203.2 billion won in shares yesterday, after news that U.S. President Barack Obama had authorized targeted airstrikes against ISIS in Iraq.

It’s not the first time an extended buying spree was led by foreigners in the Korean stock market.

Last year, foreigners bought a total of 16.5 trillion won worth of Korean shares from July through October.

They were net buyers for five straight months from September 2010 through January 2011.

Right after the 2008 global financial crisis, foreigners had their longest buying streak of 13 months from March 2009 through April 2010. The total of net purchases during the period was 37 trillion won.

Last month, American investors bought 1.4 trillion won worth of shares, marking the largest purchase by investors from a single nation. Japanese investors bought 560 billion won and Saudi Arabian investors 550 billion won, according to FSS data.

BY SONG SU-HYUN [ssh@joongang.co.kr]




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