Investors pulled out 2 trillion won ($1.68 billion) from South Korea’s stock funds so far this year as investor sentiment quickly soured amid coronavirus fears.
As of Feb. 7, investment of 961 local equity-based funds with initial outlay of more than 1 billion won totaled 2.03 trillion won, down 2.03 trillion won from the beginning of the year, according to financial market tracker FnGuide.
By type, 575 active funds lost a net 452.9 billion won and 386 index funds a net 1.55 trillion won during the same period.
Index funds drove the latest selloff. When stretching the period to the latest three months, active funds saw a net loss of 1.16 trillion won while index funds posted a net gain of 1.71 trillion won, for a total net inflow of 544.5 billion won.
In contrast, funds that invested primarily in safer debt securities gained a net 262.6 billion won so far this year. But when looking at the latest three-month period, they recorded a net loss of 3.29 trillion won.
By country, stock funds invested in China, the epicenter of the virus outbreak, suffered the most, with net losses amounting to 223.4 billion won since the beginning of the year.
Overseas stock funds as a total drew a net 26.9 billion won, with global funds pulling in 235.7 billion won and North American funds 63.5 billion won.
“Demand for high-risk assets had stayed strong up until mid-January even during the heightened U.S-Iran tensions amid the much-anticipated phase one trade deal between the U.S. and China,” said Na Joong-hyuk, researcher at Hana Financial Investment. “But since the outbreak of the new coronavirus from mid-to-late January, investors have been moving their money in droves to safer assets like bonds and gold.”
Facing a highly volatile year, Korea’s main Kospi and Kosdaq notched a year-to-date gain of 0.65 percent and 0.42 percent, respectively, as of Feb. 7.
The return of local stock funds averaged 1.51 percent so far this year, down from the three-month return of 6.17 percent and six-month return of 20.8 percent.
Chinese stock funds yielded a negative return of 1.88 percent, while North American funds delivered returns of 3.52 percent and global funds 3.39 percent during the same period.
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