Inflow of 25 Tln Won in Foreign Funds

Foreign investors find Korean stocks worthy of investment as KRX joins FTSE

The 107 firms listed on the Korea Exchange in the category of “semi-advanced” has been listed on the Financial Times Stock Exchange (FTSE) when the KRX officially entered the FTSE on Sept. 22, the KRX said recently.
The KRX expects foreign investment in Korean blue chips will likely increase, attracted by their listing on the FTSE, especially by the investment funds that prefer to invest in the stock markets of advanced countries.
The FTSE has notified KRX that the 107 selected companies on the KRX have been transferred to the FTSE listing, including Samsung Electronics, POSCO, Hyundai Motor, Kookmin Financial Holding and others among the top level in market values on the KRX list, along with Amore Pacific and Yuhan Kimberly. Daum Co. is the only stock transferred to the FTSE from the Kosdaq, KRX officials said.
They said they expect the companies will be kept on the FTSE list until March next year when the FTSE holds its regular Asia-Pacific Committee meeting. They also expected that many conservative foreign funds are likely to increase their investments in Korean stocks listed on the FTSE, as there would be no changes in the companies on the list unless there were mergers and other special changes in those companies. Those funds that only invest in advanced countries’ stocks total $3 trillion. They project some $21.5 billion would flow into the KRX as a result of joining the advanced stock index.
Such blue chip shares as those of Samsung Electronics are likely to draw $4.4 billion as foreign funds would buy them, followed by POSCO with $1.7 billion, they said, adding that British funds have been flowing into the KRX increasingly in September.
The Korea Securities Depository said as of Sept. 18, a net total of 4.32 trillion won worth of foreign funds have flowed into the Korea Exchange, of which 2.98 trillion won is from British funds, a huge increase compared to the 14 percent that the British funds accounted for as of July. U.S. funds amounted to 809 billion won, while Saudi Arabian funds amounted to 461.7 billion won and Irish funds totaled 230 billion won. Japanese fund inflows amounted to 126.2 billion won and funds from Luxemburg came to 86.4 billion won. Funds from the Cayman Islands amounted to 216.3 billion won.
A large amount of British funds flowed into the Korean stock market, as the FTSE is a British stock index and European funds usually benchmark the index.
Analysts said funds are likely to move out of Korea when the KRX listing in the FTSE is completed, which would have an impact on the stock market, especially funds from the Cayman Islands, as they are usually hedge funds and funds that seek tax havens.
Similar developments occurred when the KOSPI reshuffled the 200 companies on its list, they said. nw

This is a scene of the opening ceremony for the KOSPI 200 Global Futures Market at KRX Busan by a group of dignitaries including acting President of the Korea Exchange Lee Chang-ho, Chairman Hwang Geon-ho of the Korea Financial Investment Association and Honorary Chairman Phupinder Gill of Chicago Mercantile Exchange, among others.