Foreign Investors Earn W145 Trillion from KSE

Jon · Korean Citizen Joined: Mar 19, 2004 Posts: 509

Foreign Investors Earn W145 Trillion from KSE

Foreign investors earned nearly W145 trillion from the Korean Stock Exchange (KSE) in the seven years that followed the financial crunch in 1997-98, averaging over W20 trillion a year, according to a study made public Tuesday.
In contrast, Korean retail and institutional investors earned W69 trillion respectively during the 1998-2003 period, less than half of the amount earned by their foreign counterparts.

According to a study that Good Morning Shinhan Securities conducted at the request of the Chosun Ilbo, foreigners earned a total of W144.1 trillion from the domestic stock market during the seven-year period.

On the other hand, Korean retail and institutional investors earned W69.1 trillion and W69.5 trillion during the seven-year period, respectively. Foreigners earned as much as W38.3 trillion last year alone.

Foreign investors' ability to earn significantly higher sums than their Korean counterparts in the stock exchange is attributed to their investment strategy of concentrating on blue chip stocks over longer terms.

"Local investors have no way but to earn less because most of them are engaged in day trading or several months' trading at the longest, or they merely follow foreigners' buying and selling trends," said Pak Hyun-ju, chairman of Mirae Asset Securities Co.

Foreign investors' influence in the financial market is also rising. They hold 42 percent of the market capitalization of the Korean stock exchange. In comparison, foreign investors have 20 to 30 percent-stakes in Thailand and Indonesia, both of which were badly shaken by the earlier financial meltdown along with Korea.

"By sweeping the shares of competitive Korean corporations, foreigners earn substantial dividends as well as margins from hiked share prices," said Kim Hak-hyun, a researcher at Good Morning Shinhan Securities. "Even when local corporations make solid profits, foreigners' purses get fatter quicker than those of local investors," he added.

(Han Yoonjae, yoonjae1@chosun.com )