Kosdaq soars to 15-month record
One day after another, the Kosdaq has pulled off its best performance this year with record-high purchases, especially from institutional investors. The secondary index rose 1.53 percent to 768.03 on Wednesday, marking gains for seven consecutive days and the highest mark in fifteen months.
Kosdaq was stuck at the 600 level only last month, a band that it has camped in since December last year. The index also hit an all-time high in trading value as institutional and foreign investors together purchased a record-high amount of Kosdaq stocks.
Analysts point to the better-than-expected earnings by the major stocks in the third quarter as one of the factors for the bullish market.
“The major stocks on the Kosdaq, especially bio-health related ones such as Celltrion, show growth momentum as they saw the rise in sales abroad as well as regulatory approval,” said Lim Sang-kook, a researcher at KB Securities.
Celltrion, the top player on the secondary bourse that is set to move to the Kospi next year, reported an 89.3 percent jump in operating profit for the third quarter. Other Kosdaq-listed companies overall generated better earnings results as their sales and operating profits rose 0.8 percent and 0.43 percent respectively, according to the Korea Exchange.
Tuesday’s news that two of the largest Kosdaq stocks - Celltrion Healthcare and SillaJen - were included in the MSCI Korea Index also contributed to boosting the junior index. Once added to the index, the stocks could gain access to a wider range of investors.
The favorable decision coincides with the Moon Jae-in administration’s announcement to support the secondary market with tax breaks and deregulation.
The financial regulators are expected to announce details within this year. The diplomatic breakthrough with China after the installation of a U.S.-led antimissile shield worked as a boost for many retail stocks that are heavily dependent on China consumers.
“The relations between Korea and China have been normalized and that eased uncertainties in the market,” said Lee Sang-heon, an analyst at HI Investment & Securities.
But observers warn that the current rally will not reverberate across the board since stocks with larger caps are leading the gains.
“Now, investors flock to large-cap stocks on the Kosdaq,” said Kim Young-ok, an analyst at KTB Investment & Securities. “So, the gap in profits and return ratios will widen among industries and by size of market capitalization,” Kim said.
BY PARK EUN-JEE [email@example.com]