Value context and insight. lkm@koreatimes.co.kr
Foreigners dump Korean shares amid trade feud
By Lee Kyung-min
By Lee Kyung-min
The Korean stock market tumbled as foreigners continued to offload their holdings for the 11th consecutive session, as the drawn-out U.S.-China trade feud shows no signs of abating, analysts said Thursday.
According to the Korea Exchange (KRX), foreigners were the net sellers of Korean stocks from Nov. 7 to Thursday, a notable turn from the previous buying spree that continued for six days from Oct. 30 to Nov. 6.
The KOSPI closed at 2,096.60, Thursday, down 28.72 points or 1.35 percent from the previous session.
Around a combined 1.8 trillion won ($1.5 billion) has been offloaded within the 11 sessions, with the leading KOSPI having lost over 1.1 trillion won in trading volume in the period.
They sold a net 570 billion won, Thursday, the largest daily selloff in 2019, following 334 billion won, a day earlier.
Park Chong-hoon, head of economic research at Standard Chartered Bank Korea, said that the volatile sentiment could continue.
“The market sentiment reacts way too quickly following a sudden turn of events, especially if bad news makes the headlines. The same goes with a trade deal. It remains to be seen whether the stock could find an upward momentum any time soon,” he said.
The selling spree largely puts an end to an earlier market expectation that the KOSPI would be able to enjoy a year-end rally amid what the market participants considered a glimmering yet firm sign of the U.S.-China feud showing signs of resolving the conflict.
The KOSPI closed Nov. 1 at over 2,100, a level investors and analysts view psychologically important to bolster upward momentum.
The upbeat mood peaked Nov. 15, when the stocks closed at 2,162.18, after White House economic adviser Larry Kudlow raised hopes for the trade dispute, saying “We are getting close.”
This indicated a positive mood which he said “has not always been so in these things,” at an event at the Council on Foreign Relations in Washington.
But the positive sentiment was quick to lose steam, after U.S. President Donald Trump threatened higher tariffs on Chinese goods during a meeting with the Cabinet if the country does not make a deal on trade Tuesday (local time).
Another driver of foreign selloffs was the rebalancing in the Morgan Stanley Capital International (MSCI) Emerging Markets Index, which had them pull funds from Korean market and divert them to China.