Since the start of the year, foreign investors have continued net buying in the KOSDAQ market, expanding both their market capitalization held and their share. The buying appears to have been spurred by expectations for the government's KOSDAQ activation policies.
According to the Korea Financial Investment Association and others on the 14th, foreign investors posted net purchases totaling 555.9 billion won in the KOSDAQ market through the 12th this year.
As of the 12th, the market capitalization of KOSDAQ stocks held by foreign investors was 62.7565 trillion won, surging by nearly about 13 trillion won in 30 trading days from 49.7746 trillion won at the end of last year. During this period, foreign investors' ownership ratio also rose from 9.83% to 10.16%.
Foreign investors were found to have funneled money not only into individual stocks but also into KOSDAQ-linked exchange-traded funds (ETF). Foreign investors net bought "TIGER KOSDAQ150 Leverage" by 35.7 billion won and the "KODEX KOSDAQ150" ETF by 31.7 billion won.
The expectation of government measures to bolster the KOSDAQ is interpreted as having led to foreign buying.
Jung Da-un, an analyst at LS Securities, said, "The KOSDAQ has been relatively sluggish compared with the strong upward trend of the KOSPI, but expectations have grown for the government's KOSDAQ activation policies," adding, "Given that, this is a time to assign an additional premium, and from the current price level there is about 25% upside potential." She then set the KOSDAQ index target at 1,400 points.
Brokerages analyzed that when investing in the KOSDAQ market, a strategy of selecting industries and stocks based on the level and direction of improvement in return on equity (ROE), earnings, and valuation (corporate value), rather than the index, is necessary.
Kim Jung-won, an analyst at Hyundai Motor Securities, said, "Semiconductors warrant an overweight; pharmaceuticals/biotech and IT hardware call for a selective approach; machinery is neutral or underweight; and IT appliances should be underweighted."