Foreign investors’ net purchase of Korean stocks on the secondary Kodsdaq market in February rose to a near 15-year high as they stayed on looking for bargain values in smaller-cap stocks instead of export-driven, blue-chip stocks on the main Kospi.

According to the Financial Supervisory Service (FSS) on Monday, foreign investors’ net buying of local shares on the Kosdaq bourse in February reached 627.0 billion won ($552 million), the highest since April 2004.

Investors from the United Kingdom net bought the largest 274.0 billion won worth Kosdaq stocks, followed by those from the United States with 190 billion won, Switzerland with 43 billion won, Germany with 33 billion won, Cayman Islands with 33 billion won, Luxembourg with 28 billion won, and Singapore with 17 billion won. On the contrary, investors from Australia net sold 13 billion won worth Kosdaq stocks, those from Ireland 8 billion won, and Netherlands 1 billion won.

Market experts believe offshore investors chose to bet on the smaller-cap Kosdaq stocks with growth potential at a time when uncertainty on the global trade front is growing due to the ongoing trade row between the U.S. and China and Britain’s struggle with Brexit deal, which bode ill for blue chip, export-focused companies mostly listed on the Kospi.

The foreign investors in January had net bought 3.9 trillion won worth stocks on the Kospi, the highest since July 2016, while net selling 130 billion won worth on Kosdaq amid signs of easing trade tensions between the U.S. and China and slowing rate hike movement by the U.S. Federal Reserve.

But the mood was quickly reversed as the U.S.-China trade talks in February ended with little progress while the global market faced renewed Brexit uncertainty. Reflecting the increased risks for the export-driven sectors, Kospi retreated 0.4 percent in the month whereas Kosdaq gained 2.0 percent.

It is widely expected that the trend will continue for a while as trade uncertainties still remain, and the growth in the country’s exports are slowing down. In the first 22 days of March, Kospi was down 0.4 percent and Kosdaq was up 1.7 percent.

By Chung Seul-gi and Cho Jeehyun

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