Active Foreign Investors
Liquidity is boosting the stock price index in Korea, as the Bank of Korea cut the key rate to below 2.0 percent and the interest rate hike by the Fed is expected to take time. The majority of experts are positive about the short-term outlook of the Korean stock market, but the Q1 performances of Korean companies may act as a variable.
According to the Korea Financial Investment Association, total customer deposits broke the 18 trillion won (US$16.1 billion) mark, for the first time in 18 months, on March 13. The credit loan balances are close to 3 trillion won (US$2.6 billion), and more than 3.25 trillion won (US$2.9 billion) are in the KOSPI and KOSDAQ, respectively.
Foreign investors’ net purchases amounted to 2.73 trillion won (US$2.44 billion) between mid-February and mid-March. Individual investors recorded a net selling of approximately 670 billion won (US$599 million), while institutional investors sold 2 trillion won (US$1.8 billion) during the same period. KOSPI, although closed at 2,208.45 points to lose 0.07 percent from the previous session, touched this year’s high of 2,030 points during the March 18 trading session.
Under the circumstances, some stock market experts are claiming that the more-than-expected upward movement is based on the improving fundamentals of the market. Still, the others say the indices will face a challenge in April and May, when companies announce their earnings for the first quarter.
According to FnGuide, the combined operating profits of 225 KOSPI companies, allowing for a performance estimation, are 135.4207 trillion won (US$121.1650 billion) as of now, 0.06 percent down from a month ago. The decrement is far smaller compared to previous years.
“The ongoing drop in international oil prices is predicted to have allowed the companies to save at least 50 trillion won [US$45 billion] in production costs,” said a securities analyst, continuing, “This is expected to have increased their operating and net profits by 14.2 trillion won [US$12.7 billion] and 8.3 trillion won [US$7.4 billion], respectively.”