Chinese investors cash out $1.1 bn Korean shares over a year

2017.08.02 13:13:04 | 2017.08.02 15:41:51

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Chinese investors pulled 1.2 trillion won ($1.1 billion) out from the Korean stock market over the last year amid diplomatic row between Beijing and Seoul over the deployment of U.S. Terminal High Altitude Area Defense (THAAD) anti-missile system in Korea.

According to Financial Supervisory Service on Tuesday, Chinese investors net-sold combined 750 billion won stocks in Kospi and secondary Kosdaq during the last six months of 2016 and another 520 billion won worth in the first six months this year.

Their solo act raises questions of political motive as most other foreign investors have been buying more than selling Korean shares. Non-Chinese foreign investors net purchased 17 trillion won worth from July to June, during which they net sold only in November. U.S. investors alone net-bought 11 trillion won worth in Korean shares so far this year.

One Chinese private equity fund told the Maeil Business Newspaper that institutional players move upon guidelines from state authorities. “We can hardly go against the guideline at a time overseas capital investment is under tougher scrutiny,” he said on condition of anonymity.

Beijing remains opposed to installation of the U.S. missile shield system in fear of the mainland falling under the powerful radar supervision and the THAAD building up to broader U.S. missile system network in Japan and Korea.

There are 599 Chinese retail and institutional investors registered in the Korean stock market, and they together hold 10.9 trillion won worth shares listed on either Kospi or Kosdaq as of June 30. Chinese investors make up 1.7 percent of 598 trillion won worth of stockholdings by non-Korean citizens. The share goes up to 3.4 percent when including investors based in Hong Kong.

Kospi closed Wednesday at 2,427.63, up 0.19 percent to 2,428.79 from the previous session and Kosdaq at 657.52, up 0.67 percent.

By Shin Heon-cheol and Kim Dae-gi

[ⓒ Pulse by Maeil Business Newspaper &, All rights reserved]