Korea’s benchmark stock index Kospi has recovered from COVID-19 shock faster than the aftermath of past external crisis and held tougher than most other market indices.

Kospi broke past 2,000 after dipping to as low as 1,457.64 on March 19, a level unseen since July 2009, amid rapid spread of COVID-19 in the country. From the level, Kospi has gained nearly 40 percent.

The market recovery has been among the fastest. Dow Jones of the U.S. and Japan`s Nikkei have so far risen 31.6 percent and 28.2 percent, respectively, from their annual lows.

The rebound was easier since its fall was less severe. Kospi had fallen 35.7 percent from this year’s high, while Dow Jones and pan-European Euro Stoxx 50 had retreated 37.1 percent and 36.6 percent, respectively.

Retail investors have been the main driver of Kospi’s fast rebound, market observers explain.

Individual investors bought 18.6 trillion won ($15 billion) in local stocks over the past three months while foreign investors sold 20 trillion won.

“Korean shares were discounted even before they were hurt by coronavirus outbreak,” said Choi Seok-won, head of SK Securities research center. “The virus crisis has made shares more affordable and appealing for individual investors looking for stronger returns amid cheap and easy liquidity.”

Foreign selloff has also eased. They had offloaded 12.5 trillion won worth in March but their sale volume has decreased to 4 trillion won in April and 3.5 trillion this month until Tuesday.

Winners were IT and biotech companies amid surging online service demand and newfound recognition of Korean medical technology.

Kakao Corp., operator of the country’s top messenger app Kakao Talk, has joined the top 10 rank in market capitalization. Its stock price has jumped 45 percent this month alone. Internet giant Naver Corp. and game tycoon NCSoft also saw their stock rise 20 percent and 28 percent, respectively, this month.

Market watchers are skeptical of further climb due to a lack of impetus.

“The Kospi may stay boxed in the range of 1850 and 2100,” said Joh Yong-joon, head of Hana Financial Investment’s research center. “To break out of the box, we would have to see cyclical recovery in corporate performance and removal of uncertainties on the global front.”

By Park In-hye, Ahn Gab-seong, and Shin Yoo-kyung, and Cho Jeehyun

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