Kospi activity falls as retail investors turn from stocks

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Kospi activity falls as retail investors turn from stocks

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The Korean stock market’s turnover shrank last year compared to a year earlier as retail investors, disappointed with the Kospi’s limited movements, scaled back their trading.

The turnover of shares on the main index, the Kospi, was 247.15 percent, while turnover on the secondary market, the Kosdaq, was 539.55 percent, according to data released by the Korea Exchange on Monday. This means each share on the Kospi was traded an average of 2.5 times last year, while the average Kosdaq share was traded 5.4 times.

The Kospi’s turnover rate last year represented a drop of 39.84 percentage points from a year earlier. Indeed, the daily average transaction of stocks on the main bourse was 17 percent less than the previous year at 377 million shares.

The Kosdaq, on the other hand, saw more activity. Its turnover rate was 17.56 percentage points higher than in 2015.

By industry, electricity and gas stocks had the lowest turnover on the Kospi with 23.22 percent, followed by telecommunication stocks with 55.53 percent and financial companies with 67.59 percent.

On the Kosdaq, internet companies had the lowest turnover with 277.72 percent, followed by finance with 315.77 percent.

In terms of the highest turnover, medicine was No. 1 on the Kospi with 461.03 percent, followed by retailers with 457.91 percent.

On the Kosdaq, textiles and clothing topped the index with a whopping 1,191.12 percent turnover rate, followed by computer services with 994.20 percent.

While the most active stocks spanned different industries, most had one thing in common: an alleged connection to politicians. Among the 10 companies with the highest share turnover, six are believed to have some type of relationship with a lawmaker.

Sewoo Global, which manufactures plastic and ceramic products, was the most active stock on the Kospi, with a turnover rate of 4,141.13 percent, 10 times higher than the index average.

The company is said to have a connection with Bareun Party lawmaker and potential presidential candidate Yoo Seong-min.

The relationship dates back to 2011 when Yoo, who was then head of the ruling party’s Daegu office, opposed President Lee Myung-bak’s plan to scrap construction of a new airport in the southeastern region of the country.

Sewoo Global owned land in the area that was to house the new airport.

The company’s stock experienced high turnover last year even as its share value dropped 1.33 percent compared to the previous year.

Another active stock purportedly connected to a high-profile politician is Sungmoon Electronics, which is said to have a relationship with former UN Secretary General Ban Ki-moon, who recently dropped out of the Korean presidential race.

The company’s CEO, Shin Jun-sup, held an international event with Ban when he was president of the nonprofit organization Junior Chamber International in 2009.

Sungmoon Electronics was third on the list of stock with highest turnover, at 2,341.69 percent.


BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]

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