| A closing price of the benchmark KOSPI is displayed at a dealing room of Hana Bank in Seoul, Friday. Yonhap |
By Lee Min-hyung
Foreign investors returned to a selling spree of Korean stocks in June, for the first time in three months, on rekindled fears of the U.S. Federal Reserve's anticipated next rate hike.
According to data from the Financial Supervisory Service, foreigners sold local shares worth 322 billion won ($247 million) last month. They net-sold 46 billion won worth of KOSPI-listed stocks, and extended a bigger selling spree worth 276 billion won in the secondary Kosdaq.
The balance of foreigners' holdings in listed securities came in at 934.6 trillion won as of the end of June. This includes 691.7 trillion won worth of stocks and 242.8 trillion won in bonds. Their stock holdings accounted for 26.9 percent of all the combined market capitalization.
This was in contrast to their buying spree during the same period in the U.S. and the rest of Asia, where they purchased shares worth 700 billion won and 500 billion won, respectively. But they net-sold shares worth 500 billion won in the Middle East, and also engaged in a selling spree worth 300 billion won in Europe.
U.S. investors accounted for 41 percent of all foreign stock holdings here. Those from Europe and other Asian countries followed on the list.
Data from the Korea Exchange also showed that the main bourse closed with a week-on-week fall of 1.45 percent at 2,527.05 on the last trading day of last week. Retail investors also defended an additional fall of the KOSPI by purchasing local shares worth 1.28 trillion won. Institutional and foreign investors sold Korean shares worth 1.40 trillion won and 25.2 billion won over the past week.
Foreign investors focused mostly on buying large-cap tech shares while engaging in the overall selling spree. Samsung Electronics topped the list, with foreigners net-purchasing 313 billion won worth of its stocks last week.
Brokerage houses forecast the Korean stock markets to suffer an additional fall from a near-term viewpoint amid lingering recession woes and the Fed's anticipated upcoming rate hike. NH Investment & Securities expected the main bourse to move within a band of 2,490 and 2,610 this week.
“Concerns regarding the Fed's rate hike will place downward pressure on the local stock market,” said Kim Young-hwan, an analyst at the securities firm. “Investors are advised to focus on buying semiconductor stocks sometime around mid-July when corporate earnings season starts, which will possibly help change the overall atmosphere of the stock market.”
The Fed plans to hold its next Federal Open Market Committee meeting on July 25 and 26 and is widely forecast to take another baby rate hike of 25 basis points.