Focusing on ETFs
Korea Exchange announced on April 13 that foreign investors posted a net purchase of 233.8 billion won in the KODEX 200TR ETF last week and Monday this week. During the same period, they net-bought 110.1 billion won of KODEX MSCI Korea TR and 48.5 billion won of TIGER MSCI Korea TR.
In addition, in the KOSDAQ market, their net purchase totaled 42.7 billion won, 23.3 billion won and 9.1 billion won for KODEX KOSDAQ, KODEX KOSDAQ 150 Leverage and KODEX KOSDAQ 150 Futures, respectively. On April 10, their top 10 net purchases included five ETFs in both markets.
With the total return ETFs for dividend reinvestment constituting the top net purchases, more and more foreign investors are expected to prepare a long-term investment in the South Korean stock markets.
However, analysts say that foreign investors are not optimistic about the markets yet. “It seems that the investment in the total return ETFs is for futures hedging or basket hedging and foreign investors are using the ETFs for short-term as well as long-term trading,” an asset management firm explained.
According to market experts, foreign investors, who sold South Korean stocks worth more than 13 trillion won last month alone, are betting on a short-term rally and adjusting their portfolios with ETFs rather than resuming a large-scale investment in the local stock markets. Especially, they bought a lot of ETFs in the KOSDAQ market during this month’s rally. “Leveraged ETFs are used for short-term gains and the purchase seems to have to do with arbitrage trading,” one of them mentioned.