SEOUL, Dec. 30 (Korea Bizwire) — South Korea’s benchmark stock index skyrocketed over 30 percent this year from a year ago, buoyed by strong buying of individual investors and expectations of a speedy recovery from the pandemic next year, the bourse operator said Wednesday.
In the final trading session of 2020 on Wednesday, the benchmark Korea Composite Stock Price Index (KOSPI) closed at a record 2,873.47 points, up 30.75 percent from last year’s final closing at 2,197.67.
The total market capitalization also rose 34.2 percent on-year to 1,981 trillion won (US$1.82 trillion), mostly aided by advances in market heavyweights such as chipmakers, KRX data showed.
The average daily turnover soared 144.5 percent to 12.2 trillion won, with trading volume surging 90.2 percent, indicating the high volatility on the market this year.
In addition, the tech-heavy KOSDAQ logged stellar performance in 2020, finishing at 968.42 points, up 44.6 percent from 669.83 a year ago.
The KOSDAQ’s total market cap surged 59.8 percent to 385.6 trillion won. The daily trading volume surged 150.9 percent, and daily turnover leaped 97.8 percent, according to the KRX data.
Analysts said the emergence of retail investors opened a new chapter in the local stock market in 2020, particularly in the worst moments of the COVID-19 pandemic.
Retail investors were net sellers in 2019, but they raked in a massive 16.3 trillion won on the main KOSPI market this year.
In contrast, foreign investors sold a net 147.6 billion won, and institutions offloaded a net 10.5 trillion won. Foreign stock holdings accounted for 36.4 percent of the market capitalization this year, down from the previous year’s 38.4 percent, the KRX said.
Since March, stocks gained high popularity among individuals as a lucrative tool to make money, as the Bank of Korea slashed the key interest rate twice in March and May to a record low of 0.5 percent to minimize the pandemic’s fallout.
Previously considered a minor force in the foreigner-dominated local market, individuals are credited for the KOSPI’s v-shaped rebound from the intraday bottom of 1,456.64 on March 19 to the all-time peak at 2782.79 on Dec. 14.
In the period from March 1-Dec. 30, individuals bought a net 38.1 trillion won worth of local stocks on the main bourse, while foreigners dumped a net 21.5 trillion won and institutions offloaded a net 8.2 trillion won.
Analysts said individuals helped accelerate the re-evaluation of South Korean stocks, undervalued in the eyes of foreigners for many years compared with their Asian peers.
Local experts expected the KOSPI to further hike next year, with multiple brokerages forecasting the index to top 3,000 points.
“Some indicators show the stock prices may have exceeded their true value since the fourth quarter this year,” Kim Dae-joon, a researcher at Korea Investment Co., said.
“But (the KOSPI) is likely to climb higher, considering potential boosters such as (U.S.) stimulus efforts and vaccine hopes; domestic economic support; improving corporate earnings; and high inflow of foreign investment,” he added.