Kospi takes loss after hitting 2,300 in morning trade

The main bourse took a loss Wednesday mainly on foreign selling of futures, after its index hit a height of above 2,300 points in early morning trade Wednesday.

The benchmark Korea Composite Stock Price Index closed at 2,270.12, down 22.64 points, or 0.99 percent, from the previous session Monday. Markets did not open Tuesday for the presidential election, where Moon Jae-in of the Democratic Party of Korea clinched a landslide victory.

Opening at 2,295.25 on Wednesday, the Kospi surged to an intraday high of 2,323.22 at around 9:20 a.m., but fell to below 2,300 in less than 10 minutes. The index took the downward turn at around 11:30 a.m.

Market behemoth Samsung Electronics shed 3.02 percent, or 71,000 won ($62.50), to 2,280,000 won, ending nine straight trading days of gains. 

Analysts cited foreign selling of futures as the reason for the drop from a rapid rally Monday, which led the top-tier stock index to an all-time high close of 2,292.76.

“The Monday rally appears to have been transitory,” said Park So-yeon of Korea Investment & Securities. “The investors on Monday seemed to have braced for futures expiration dates on Thursday and things are going back to normal now.”

Despite losses, many market observers took a positive stance on a possible rally in the near future on the back of an anticipated policy drive by the newly elected Moon.

Market watchers showed prospects of improved corporate governance along with the adoption of a stewardship code by institutional investors, which beckon “a removal of obstacles standing in the way of capital market improvement,” as the Democratic Party put it.

“We expect corporate governance will likely continue to improve along with broad-based support for the need for better governance as a sound business strategy,” wrote Kwon Goo-hoon, chief financial analyst of Goldman Sachs, in a Wednesday report.

By Son Ji-hyoung (consnow@heraldcorp.com)