Korea’s secondary bourse approaches 18-year high

South Korea’s secondary bourse has continued to rally over the past few weeks, touching the 930-point mark during early trading on Tuesday and marking an 18-year high.

The tech-heavy bourse reached 2,834.40 on March 10, 2000, the result of so-called “dotcom fever.” Since that bubble burst, it has never again surpassed the 943 points posted March 22, 2002.

Considering the recent record-breaking rallies in the nation’s main bourse, Kospi, expectations are also high for Kosdaq, according to some watchers. If the Kospi rally was led by massive foreign buying, Kosdaq appears to be witnessing an influx of retail investors betting on entertainment, bio and auto parts shares, they said.

Although the index closed lower Tuesday, at 906.84, it has nearly doubled from the rock bottom level of 419.55 posted in March, when the market was hit hard by the onset of COVID-19.

Large-cap stocks in the Kosdaq market traded mixed.

Sectors such as internet, broadcasting services, transportation, software and entertainment were strong. While CJ ENM and Studio Dragon jumped 1.34 percent and 1.94 percent, Dongjin Semichem and EcoPro BM gained 4.62 percent and 0.61 percent backed by Tesla stock’s surge overnight on Wall Street.

Close to the end of the year, Kosdaq often moves downward as retail investors offload shares to avoid paying major shareholders’ taxes. So far this year, however, the index has shown different movements on the back of the strong biopharma, IT and game sectors, according to market watchers.

Amid the fast spread of COVID-19 worldwide, hopes for a COVID-19 vaccine and treatment led a spike in health care and pharmaceuticals shares. A day earlier, Celltrion Healthcare soared 14.76 percent, while HLB and HLB Life Science surged 11.54 percent and 13.99 percent.

“The Kosdaq market has recently been an attractive investment destination since expectations toward improving economic indicators and a vaccine development have led investors’ net purchase. The strong Korean won also attributed to foreigners’ net purchase so far from the local market,” Daishin Securities analyst Lee Kyung-min told The Korea Herald.

“However, foreigners went on profit-taking later on Tuesday’s trading since their investment sentiment has weakened, with the relatively weaker Korean won and negative reports on Celltrion. In the short term, offshore investors’ movement will vary depending on the won-dollar currency trend.”

Meanwhile, Kospi closed at 2,700.93, down 44.51 points or 1.62 percent from the previous session’s close. The index extended its all-time high for a fifth consecutive session a day ago, but affected by growing concerns over the COVID-19 resurgence, it moved downward after opening lower.

By Jie Ye-eun (yeeun@heraldcorp.com)