Trading on South Korea’s stock exchange surged amid speculation investors are reshuffling portfolios to include small-capitalization companies.
The volume of shares changing hands on the Kospi stock index was 99 percent higher than a 30-day average, according to data available at 3:50 p.m. in Seoul, even as the stock market’s turnover fell 20 percent from Wednesday’s level to 4.37 trillion won ($3.7 billion). About four shares rose for every three that fell on the Kospi index, which climbed 0.1 percent to 1,947.10 at the close as it rebounded from the biggest decline in a month.
“The jump in trading volume is driven by a sudden rush into small-cap companies, rather than a move in the blue chips,” said Bae Sungyoung, a Seoul-based strategist at Hyundai Securities Co. “The volatility in the smaller companies is causing frequent trades.”
The Kospi Small Cap Index, which has returned 27 percent in 2015, is on course for its biggest outperformance against the Kospi Large Cap Index for any year since 2005, as South Korea’s President Park Geun-Hye introduced measures to spur innovation and curb the economy’s reliance on conglomerates. The Kospi measure of large companies has fallen 3.3 percent this year.
Shares of bigger companies such as Samsung Electronics Co. have been struggling as they become targets of foreign selling as corporate governance issues erode investor confidence, exports slump and investors await an impending increase in U.S. interest rates.
Among active small-cap shares on Thursday, Mirae Corp., a maker of semiconductor test handlers, soared 9 percent, while Han Chang Corp., which makes telecommunications equipment, rallied 9.7 percent. Citech Co. and E-world fell more than 12 percent with trading volumes of at least seven times their three-month averages.