An electronic signboard at Hana Bank’s dealing room in Seoul on Wednesday shows the closing prices of the nation’s benchmark Kospi and secondary tech-heavy Kosdaq indexes. (Yonhap)
Seoul stocks extended their gains Wednesday, as investors welcomed a new stimulus package of the government to stem the economic fallout from the new coronavirus outbreak and the US Fed’s latest rate cut.
The benchmark Kospi headed north throughout the day and closed at 2,059.33 -- up 45.18 points, or 2.24 percent from the previous session -- as foreign investors purchased local stocks.
Offshore investors net purchased 152.7 billion won stocks. Individual and institutional investors, however, offloaded a combined 173.2 billion won worth of stocks.
The tech-heavy Kosdaq began at 623.75 -- down 3.07 points, or 0.49 percent, from the previous session. It then moved upward throughout the day to reach 641.73 points at the closing bell -- increasing 14.91 points, or 2.38 percent from the day earlier.
Foreign and institutional investors boosted the index, scooping up 98.9 billion won and 42 billion won worth of stocks, respectively.
The local currency closed at 1,187.80 won against the greenback -- up 7.40 won from the previous session’s close.
Stock market turning bullish on Wednesday came hours after the South Korean government unveiled a supplementary budget bill and the Fed cut interest rates by half a percentage point in an emergency action to quell markets’ fear on COVID-19.
“Foreigners‘ return was led by new stimulus packages both in and outside Korea,” said Noh Dong-kil, an analyst at NH Investment & Securities.
“The stronger local currency attracted offshore investors. Further, the Fed’s surprise rate cut, investors’ expectation of rate cut by the Bank of Korea is getting high, which will be a good rebound source for the local market.”
Meanwhile, offshore investors sold a net $3 billion (3.56 trillion won) worth of Seoul stocks last month amid the increasing coronavirus scare, local market data showed Wednesday.
Their net sales marked $165 million from a month earlier, according to a report from Yuanta Securities.
The spike was attributed to foreigners turning away from emerging economies to lower-risk assets such as US dollars and gold.
By nation, Brazilian stocks saw the biggest selling with $4.24 billion worth of stocks unloaded. Political uncertainty and the sustained sluggish economy added to investors’ negative sentiment, which led the country to record the fifth consecutive month of foreign net selling last month.
Followed by Taiwan with $3.59 billion -- surging from $1.14 billion from the previous month. Korea suffered the third-largest foreign selling spree. Both nations suffered from a sudden outflow amid escalating concerns over the virus epidemic due to their proximity and ties to China.
India was the sole emerging economy with foreign net purchases in the given period, with $414 million worth snapped up. The corresponding figure, however, plummeted from $1.83 billion a month earlier.
Market watchers had raised worries that foreign investors would likely pull their capital out from emerging nations’ markets, as some experts and health authorities have claimed the virus issue has turned into a pandemic around the globe.
By Jie Ye-eun (firstname.lastname@example.org