Inflating Stocks
Last week, the Korea Composite Stock Price Index (KOSPI) declined due to an increase in selling by foreign and institutional investors concerned about Korean enterprises’ Q2 earnings. Domestic stock funds underperformed, too.
According to Seoul-based researcher KG Zeroin Co., domestic stock funds lost an average of 1.16 percent for a week as of the morning of July 24. Although small-cap stock funds gained 0.41 percent on average, general stock funds lost 0.45 percent, dividend stock funds lost 0.42 percent, and the KOSPI 200 Index Fund lost 1.64 percent.
Earlier last week, the KOSPI remained steady as the Chinese stock market went up and automakers showed a bullish movement based on an increase in the won-dollar exchange rate. However, the news leaked out that Korea recorded an economic growth rate of 0.3 percent in the second quarter of this year, and failed to break the 1 percent mark for the fifth consecutive quarter, which caused the index to veer downward. Foreign investors sold more large-cap stocks than small-cap, dragging down the KOSPI by 1.09 percent. Meanwhile, the tech-heavy KOSDAQ gained 0.33 percent.
Overseas stock funds gained 2.30 percent during the same week, with Chinese stock funds posting a return of 4.65 percent. Indian stock funds rose 2.09 percent, and the other Asian emerging market stock funds excelled as well, while overseas bond and equity-balanced funds gained 0.85 percent and 0.49 percent, respectively. Overseas real estate funds recorded a return of 0.06 percent, whereas commodity funds lost 3.54 percent due to a drop in raw material prices. Brazilian stock funds declined 4.68 percent due to the ongoing recession, and basic materials sector funds showed a rate of return of negative 7.02 percent.