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Kospi hits 3-month high in hopes of economic recovery

A sign at the Korea Exchange shows the Wednesday’s closing prices of two major stock indexes. (KRX)
A sign at the Korea Exchange shows the Wednesday’s closing prices of two major stock indexes. (KRX)

South Korea’s main bourse Kospi on Wednesday rose 2.87 percent to 2,147 points, the highest in more than three months, with foreign and institutional investors scooping up local shares anticipating an economic recovery.

It was the first time that the index moved above the 2,100-point mark since Feb. 25, when it closed at 2,105.49. Kospi also saw a 47 percent increase since it hit rock bottom at 1,430 during a trading day in March under market pressure over COVID-19. A record high of 16.8 trillion won ($13.8 billion) worth of shares were traded.

Institutions purchased a net 1.16 trillion won, the largest since Jan. 18, 2016 with 1.64 trillion won and foreigners bought a net 204.1 billion won. Individuals, meanwhile, offloaded a net 1.33 trillion won, also largest since 1.45 trillion won on Sept. 14, 2012.

The tech-heavy Kosdaq experienced a roller-coaster ride during trading. The index began strong at 749.49 then fluctuated throughout the day to close at 737.66, down 0.80 percent from the previous session, as foreign and institutional investors dumped their shares.

The upturn in the local stock market was fueled by optimism over economic recovery. Investor sentiments were further boosted after Seoul announced another extra budget worth 35.3 trillion won to cushion the economic blow from the ongoing coronavirus pandemic, and the US market rally.

Despite risks from massive protests over the death of African American George Floyd and rising tension between the US and China, the US market closed higher on Tuesday (local time). The Dow Jones Industrial Average rose 0.41 percent to close at 24,474.12 while Nasdaq and S&P 500 gained 0.59 percent and 0.82 percent from the previous session’s close, respectively.

The local currency sharply rose against the US dollar, closing at 1,216.80 won against the US dollar, up 8.60 won from the previous session’s close. It was the first time in nearly 20 trading sessions that the Korean won rose its value to trade at 1,210 won against the greenback since May 11, when it reached 1,219 won.

By Jie Ye-eun (