By Yoon Ja-young
Staff Reporter
Foreign investors are moving to the junior, tech-loaded Kosdaq market, after reaping handsome investment returns on the main market.
Korea Investment & Securities said that foreigners have pulled back from the main bourse and started snapping up undervalued shares on the Kosdaq.
``Foreigners, who recorded net buying in large cap stocks until June, are increasingly buying in Kosdaq and small cap shares,'' the securities company said in a report.
Foreigners sold 840 billion won in shares in the junior market in the first half of this year, but started buying shares from July, purchasing 64 billion won stocks. In August, they bought 105 billion won shares.
They continued the buying spree in September. They bought 15.7 billion won shares in the junior market Wednesday, and bought 5 billion won more shares the next day. The buying continued Friday, as they purchased 1.6 billion won worth of shares.
The main bourse, meanwhile, recorded net selling. Thanks to the foreign investors, Kosdaq closed at 518.82, up 1.87 points, or 0.36 percent, from the previous day while the main bourse fell 4.63 points, or 0.29 percent, to 1,608.9.
They have mostly bought IT or auto parts manufacturers. According to Korea Exchange, the country's stock market operator, among the top 10 shares bought by foreigners in the junior bourse were Infraware, Seoul Semiconductor, Neowiz Games and Sungwoo Hitech.
Analysts point out that most of the stocks bought by foreigners are expecting a good performance in the second half of the year.
Foreign investors also think highly of the businesses' capability to create cash and asset value.
The stocks massively purchased by foreign investors and institutional investors recorded between 50 to 70 percent return during the past couple of months.
Dong Yang Investment & Securities analyst Won Sang-pil expected foreigners to continue buying stocks on the Seoul bourse. ``While the inflow of money to U.S. domestic equity funds decreased, their overseas equity funds are seeing liquidity flowing in,'' he said.
``While maintaining a rather conservative outlook on their local market, the U.S. investors are turning strongly confident on overseas bourses,'' he added.