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| An electronic board at a Hana Bank dealing room in Seoul shows the benchmark KOSPI closing at 2,527.94 points, Friday, up 0.16 percent from the previous session. Yonhap |
By Yi Whan-woo
The ratio of Korean stocks owned by foreign investors dropped to a 13-year low of 30.51 percent, according to the Korea Exchange (KRX), Sunday, adding to the woes of the nation's stock market, which has performed poorly in Asia due to global economic risks this year.
Some analysts say the benchmark KOSPI is forecast to rebound in August, but whether such a trend will last remains doubtful.
Accordingly, more foreign investors may offload Korean shares in the long term in search of safer assets fueled by the U.S. Federal Reserve's credit tightening and the reversal of interest rates between Korea and the U.S.
As of Thursday, foreign investors owned 606.2 trillion won ($464 billion) worth of Korean shares, which accounted for 30.51 percent of the total market capitalization of the domestic stock market, the KRX said.
The bourse operator also said the rate was the lowest since Aug. 13, 2009, when 30.52 percent of the entire shares belonged to foreign investors.
The rate of foreign ownership of KOSPI-listed shares has been mostly on a downward trajectory this year.
It started from 33.5 percent in early January and hit a yearly-high of 34.20 percent on Jan. 25, just days before LG Energy Solution, the world's second-largest electric car battery maker, made its stock market debut following the country's biggest initial public offering (IPO) on record.
The foreign holdings declined and reached new annual lows since then, amid the protracted war in Ukraine, which worsened the global energy crunch, supply chain bottlenecks and other global economic uncertainties.
The Fed's faster-than-expected tapering also contributed to foreign investors' departures, with the Korean currency sharply losing ground against the U.S. dollar. The U.S. interest rate standing above Korea's for the first time in more than two and half years also played a role.
The Korean won has slid nearly 9 percent against the greenback and fell to a 13-year low of 1,326.10 per dollar on July 15.
The U.S base rate was hiked to a range of 2.25 percent to 2.50 percent, compared to Korea's 2.25 percent, after the Fed took a giant step ― a 75 basis point increase in the key interest rate ― for the second straight month in July.
Under the circumstances, the KOSPI took a beating and tumbled below the 2,300 level for the first time in nearly two years in July.
It rebounded afterward and closed at 2,527.94, Friday, up 0.16 percent from the previous session.
"But it does not mean the market is on a path to full recovery," said Shinhan Investment economist Roh Dong-gil, adding, "Downward adjustments in stock profits will be inevitable in the third and fourth quarters of this year."
Kim Seok-hwan, an analyst at Mirae Asset Securities, voiced a similar concern.
"Downward pressure on the stock market is still large due to negative economic factors," Kim said.
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