Share Trading in Dollars Under Consideration
By Yoon Ja-young
Staff Reporter
The Korea Exchange (KRX) is considering allowing Samsung Electronics and other top blue chips favored by foreign investors to be traded in dollars in the near future, a KRX official said.
It would help foreign investors trade shares without the nuisance of exchanging currencies into won or the hedging costs. Local investors also could invest in local bourse with their dollar assets in deposit, the official said.
The measure is expected to increase listing of foreign businesses in the Korean bourse and enhance its reputation in the global market.
Initially, it may allow the dollar transactions for top 10 blue chip stocks in which foreign investors have high stakes, he said. The exchange is discussing the matter with the Ministry of Finance & Economy and the securities firms.
Foreigners take around 30 percent of the trade in the stock market as of April, and the ratio goes up to around 45 percent for the top 10 shares where foreigners have high stake.
Foreign investors kept trimming their holdings of Seoul stocks, and the portion of their shareholdings of local stock markets fell to the lowest level in four years, the Korea Exchange said.
Their shareholdings as a percentage of total market capitalization of the main bourse stood at 36.08 percent as of June 21, the exchange said.
It is the lowest level since July 7, 2003, when it fell to 35 percent. Foreign investors have become aggressive sellers of Seoul stocks since the second half of 2003. After peaking at 44 percent in April, 2004, the portion fell to 37.22 percent. Foreign investors sold stocks in 2005 and 2006.
Since the beginning of the year, foreign investors turned modest buyers. But poor performance of banks and telecom stocks is resulting in lower portion of foreign investors in the main bourse market cap.