(Bloomberg) -- Global investors are snapping up small-cap stocks in South Korea as they rotate out of big companies listed on the main Kospi index after this year's 20 percent rally and amid optimism about the government's plan to stimulate the tech-savvy market next year.
Foreigners bought 94 billion won ($88 million) of shares in the Kosdaq gauge on Wednesday, helping push up the index 3.9 percent. They sold 109 billion won of Kospi stocks. Flows into Kosdaq reached a record on Friday after the Korea Exchange announced steps to revitalize the tech-focused market.
Investors are “taking dividends and profits from large-cap Korean names after a strong 2017, and focusing on tech and biotech Kosdaq names," said Sat Duhra, a fund manager with Henderson Global Investors in Singapore. Demand was also driven by speculation that the country's top pension fund may buy more Kosdaq stocks, he said.
Foreigners have bought about $8 billion of South Korean equities this year, unfazed by the threat of war on the Korean peninsula, as they focused on markets where economies and earnings are powering on. The Kospi index is set for its best year since 2010.
To contact the reporter on this story: Heejin Kim in Seoul at hkim579@bloomberg.net.
To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Ravil Shirodkar
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