Buy Korean Stocks
Foreign investors’ net buying in the Korean stock market is expected to continue for a while, with the recent decision of the European Central Bank (ECB) to cut the base rate and better-than-expected economic indices in China.
On April 10, the Korea Composite Stock Price Index (KOSPI) closed at 2,008.61 points to break the 2,000 point mark for the first time this year. It has moved around 2,000 points since then.
During the period, foreign investors have bought Korean stocks worth a total of 5.4299 trillion won (US$5.3338 billion). In particular, the net buying has continued for about 20 trading days since May 13 and is showing signs of further expansion after the announcement of the ECB last weekend.
The ECB decided to cut the benchmark rate from 0.25 percent to 0.15 percent on June 5 (local time). The deposit interest rate fell to -0.10 percent, and the liquidity absorption measures are put on hold, too. The buying streak can also be attributed to the recovery of the Chinese economy as of late, which is supported by the favorable economic indices coming out nowadays.
“The amount of net buying by foreign investors is likely to go up from 5.5 trillion won to over 10 trillion between now and the near future in view of the similar precedents,” said a market source.