Korean Stocks Drop to a 10-Month on Fund WithdrawalsSeonjin Cha
Overseas investors sold South Korean stocks for the seventh day, the longest losing streak in two months, helping drag down the benchmark Kospi index to its lowest level since Feb. 5.
Global funds pulled a net 542.9 billion won ($492 million) of Kospi shares as of 3:36 p.m. in Seoul trading, taking total sales in the seven days to 2.83 trillion won, according to data compiled by Bloomberg. The string of outflows is the longest since mid-October. The Kospi dropped 0.1 percent to 1,897.5, while the won weakened 0.7 percent.
Korea’s stock index has declined 5.7 percent this year, the worst performer in Asia after Malaysia, as profits declined at the nation’s biggest companies and volatility in the won increased. Investors withdrew more than $2.5 billion from U.S. exchange-traded funds that buy developing nation stocks and bonds last week, the biggest outflow since January, as oil declined and concern grew the U.S. will raise borrowing costs.
“Global investors in general have been trimming exposures in emerging markets,” Park So Yeon, strategist at Korea Investment & Securities Co., said by phone today. “Some emerging investors also seem to moving funds to Chinese markets after the Hong Kong-China link opened.”
The Shanghai Composite Index has rallied 24 percent in the past month, compared with a 6.4 percent drop by the MSCI Emerging Markets Index. The link between exchanges in the city and Hong Kong began on Nov. 17, giving foreign investors unprecedented access to mainland shares.
Foreign investors sold a net 950.9 billion won worth of Samsung Electronics Co. shares in the seven days through today, the most among Kospi members. Global funds pulled 227.5 billion won from Hyundai Motor Co.
The yen’s steep depreciation is also spurring concern over exporters’ price competitiveness, Park said. The Japanese currency fell this month to its weakest level versus the dollar in seven years.
Samsung Electronics closed unchanged today. Hyundai Motor dropped 0.9 percent, taking its losses this year to 29 percent.