Posted by: Moon Ihlwan on September 21, 2009
The FTSE upgraded the Korean stock market to developed market status from emerging market on Sept. 21, but the move is expected to do little in boosting the Seoul bourse’s Korea Composite Stock Price Index, or Kospi, in the near term. The upgrade has helped foreign investors managing money against the FTSE increase their exposure in Korean stocks since it was widely publicized early this month.
Now that the upgrade has been made, foreign buying in the Korean market is expected to slow down. Foreigners, who have accumulated $4.1 billion worth of Korean shares in the past two weeks, bought $154 million more than they sold on Sept. 21, but selling by local investors pared Kospi by 0.25% to 1,695.5.
Market watchers expect Kospi to stay in a boxed range for coming weeks until mid-October when blue chips such as Samsung Electronics, Hyundai Motor and LG Electronics are expected to post strong third quarter results. As foreign fund managers will now pick Korean shares vis-à-vis rivals in developed markets, they are expected to focus on large-cap blue chips. That means Kospi’s movement will likely be dictated even more by a handful of blue chips in the future.
BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.