South Korean stocks and currency are testing new two-year highs on a string of positive news – from joining of the world’s largest trade bloc to expectations of turning the corner in coronavirus crisis with breakthroughs in vaccine development.

Foreigners have returned in full force. For the first 10 trading days of November, foreigners purchased a net 4.75 trillion won ($4.29 billion) in the main Kospi, and institutional investors 721.1 billion won. Retailers net sold 5.41 trillion won worth.

Chip and steel stocks led the rally.

The Kospi broke above 2,500 on Monday, the first time since May 3, 2018. It finished a tad lower at 2,539.15 on Tuesday.

Samsung Electronics on Monday closed 4.91 percent higher at 66,300 won in Seoul, refreshing historic high on Friday. SK Hynix also gained 9.25 percent to close Monday at 98,000 won, near the previous high of 105,000 won on Feb. 27.

Hyundai Steel shares added 3.44 percent, Dongkuk Steel Mill 6.27 percent, and Posco 1.27 percent.

Shares benefited on brighter trade outlook after Korea joined 14 other Asia-Pacific economies to form the Regional Comprehensive Economic Partnership (RCEP) at the end of a four-day Association of Southeast Asian Nations (ASEAN) summit in Hanoi on Sunday.

The pact offers a significant economic boost to Korea. While it excludes India, RCEP still covers 30 percent of the global economy and 2.2 billion of the world’s population. As of last year, Korea relied 50 percent of its exports on the countries joining the partnership.

Given the raging foreign return, the bull is expected to extend.

“If the current Covid-19 situation gets back to normal with businesses reporting earnings recovery, devalued big stocks like chipmakers, banks, petrochemical firms, steelmakers and shipbuilders could gain sharply,” said Jo Yong-jun, research head of Hana Financial Investment Co.

“All stocks will see an increase in valuations,” said Jo Ik-jae, an analyst at HI Investment & Securities Co., suggesting next year’s Kospi target at some-2,760 level. Goldman Sachs earlier expected Kospi to hit 2,800.

The won also broke the psychologically-important 1,100 on Monday for the first time since Dec.4, 2018. The dollar went lower at 1,106.60 won on Tuesday.

By Kim In-oh, Shin Yoo-kyung and Lee Ha-yeon

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