Foreign selloff in Korean stock mkt at record high in March, remains relentless

2020.03.30 12:01:19 | 2020.03.30 15:40:48

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Foreign nationals have been cashing out of Korean stock markets unendingly from March 5, with monthly net sale topping 12 trillion won ($9.87 billion) by Friday, a level not even seen during the 2008 financial crisis.

Following the Wall Street meltdown in October 2008, foreign net selling reached 4.59 trillion won, wiping out 2.71 percent of the Kospi’s total market capitalization of 566 trillion won, according to data compiled by Maeil Business Newspaper.

Foreign investors this month have net sold more than 12 trillion won worth stocks in the Kospi market, which accounts of 2.75 percent of the market’s 1,156 trillion won worth market capitalization, from March 5th to 27th. Their hefty selloff marks their record high monthly selloff in the Korean stock market.

Foreign capital exodus has wiped out value of Korean shares by 436 trillion won as of March 27 from 520 trillion won in late February. Their ownership in October 2008 was lowered to 169 trillion won from 216 trillion won.

If not for frenzied bargain hunting by domestic individuals who purchased more than a net 10 trillion won, the Korean stock market crash would have been severer than 12 years ago.

When the selloff will end is uncertain.

“Foreigners have been ‘over-selling’ Kospi-listed stocks, but their selloff could continue for a while due to growing market volatility amid ongoing COVID-19 spread,” said Lee Jung-bin, an analyst at IBK Securities.

The V Kospi 200 volatility index that peaked at 69.24 on March 19 fell to 49.32 on March 25 but rose again to 54.62 on March 27.

Their selling continued Monday, causing 0.04 percent fall in Kospi to 1,717.12.

“Foreigners would exit from Korean markets as long as the virus spreads across the United States and Europe, and economic prospects stay murky. They will stop only when COVID-19 comes under control,” said Kim Hak-kyun, an analyst at Shinyoung Securities.

Selective stocks survived foreign selloff.

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Biopharmaceutical company Celltrion promising of cure and vaccine in coronavirus stayed as foreign favorite with net purchase totaling 172 billion won in March 24-27. SK Hynix came next with net purchase of 91.1 billion won, cosmetics giant Amorepacific 29.8 billion won, Samsung C&T worh 26 billion won, Naver worth 18 billion won, and Netmarble worth 13.8 billion won.

Other popular foreign picks were Bukwang Pharmaceutical (11.4 billion won), Hite Jinro (4.7 billion won), CJ CheilJedang (3.6 billion won), Fila Holdings (3 billion won), and Orion (2.8 billion won).

By Park In-hye, Ahn Gab-seong and Lee Ha-yeon

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]