SEOUL, April 20 (Korea Bizwire) — Foreigners’ appetite for South Korean stocks is tipped to grow down the road due to the general election results from last week and improving situations over the new coronavirus here, analysts said Monday.
Offshore investors turned net buyers on Friday, ending their selling spree totaling 14.7 trillion won (US$12.1 trillion) in the March 5-April 16 period amid the coronavirus scare.
Their shift toward a buying mode pushed up the benchmark Korea Composite Stock Price Index (KOSPI) to the highest in six weeks amid eased concerns over the COVID-19 outbreak, stoking talks among players of whether their buying will continue or not.
“South Korea’s containment of the COVID-19 outbreak makes the strongest case for foreign investors’ investment decision,” Eugene Investment & Securities researcher Lee Sang-jae said.
On Sunday, new virus infections in South Korea fell to a single digit for the first time since Feb. 18, with 8 new patients added.
Lee said South Korea’s quarantine progress in new infections is approximately 34 days ahead of the United States and 14 days ahead of Italy.
Hana Financial Investment analyst Choi Yoo-joon said the ruling party’s landslide victory in the general election is likely to accelerate the enforcement of state-led stimulus packages and reform measures.
Of the 300 seats up for grab, the ruling Democratic Party secured 60 percent.
In the election period, the ruling party had pledged to boost the manufacturing sector including chips, autos, parts and bio, foreigners’ traditional favorites.
Meanwhile, experts picked South Korea’s weak economic fundamentals as a potential threat to foreign investors’ appetite, as the coronavirus pandemic crippled industrial output, consumer spending and job markets in Asia’s fourth-largest economy.
South Korea lost about 195,000 jobs in March, marking the sharpest monthly decline since May 2009, Statistics Korea data showed.
According to the survey conducted by Yonhap Infomax, South Korea’s economy in January-March is expected to contract 1.81 percent on-quarter.