12/13

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Foreigners’ selling of emerging market stocks highest in S. Korea

Among emerging market stocks, South Korean shares were most offloaded by overseas investors last month as a result of Asia’s fourth-largest economy’s reduced weighting in the Morgan Stanley Capital International emerging markets index, a report by a local brokerage said Thursday.

According to Yuanta Securities, foreigners net sold South Korean shares worth nearly $3 billion in November alone, which marked the largest volume among 10 major emerging markets during the same period. 

The MSCI logo (Reuters)

Brazil followed with a corresponding figure of a net $2.1 billion, and Indonesia came in third with a net $493 million. The Philippines and Thailand came in fourth and fifth with a net $259 million and a net $255 million, respectively.

Meanwhile, foreigners net purchased $3.1 billion worth of Indian shares and nearly $2 billion worth of Taiwanese shares in the cited period.

A Yuanta Securities analyst cited global index provider MSCI’s decision to rebalance its index early last month and increase the weighting of Chinese A shares, which came at the expense of Korea’s weighting in the index.

The benchmark index is used to measure equity market performance and tracked by institutional investors with more heavily weighed countries having tendency to attract lucrative investments.

The index is reviewed four times a year and South Korea has lost weighting to China on three occasions this year -- in May, August and November.

MSCI increased the weighting of A shares by 5 percentage points each time, having held them at 5 percent after adding them to the index in June 2018.

This means the weight of A shares on the emerging markets indexes reached 20 percent at the last rebalancing on Nov. 26.

“Foreign investors offloading of Korean stocks were most prominent in May, August and November this year when the MSCI increased the weighting of A shares each time,” Yuanta Securities analyst Min Byung-kyu said.

But Min also expressed anticipation over the fact that MSCI’s last index rebalancing of the year has ended.

“The wrap of the rebalancing can translate into a stable demand from foreign investors – when the Vanguard group (shifted from MSCI benchmarks to cheaper FTSE and CRSP indices) in 2013, overseas investors net sold Korean shares worth nearly 10 trillion for six months following the change (due to Korea being classified as a developed market in the latter two indices),” he said.

“But after the dust settled, foreigners net purchased 13.2 trillion won in the following months,” he added.

By Jung Min-kyung (mkjung@heraldcorp.com)

[수친구]

emerging 영어
발음미국/영국 [imə́ːrdʒiŋ]
뜻① 신흥의 ② 떠오르는 ③ 부상 ④ 나타나는 더보기
숙어
an emerging nation 신생 독립국; 개발 도상국.

[수친구]

off load 영어
발음
뜻① 짐을 내리다 ② 빼내다 ③ 떠넘기다

[수친구]

brokerage 영어
발음미국/영국 [bróukəridʒ]
뜻① 중매업 ② 중개업 ③ 중개 수수료

[수친구]

weighting 영어
발음미국/영국 [wéitiŋ]
뜻① 가중시키는 것 ② 첨가물 ③ 물가 조정 수당

[수친구]

wrap 영어
발음미국/영국 [ræp]
뜻① 포장하다 ② 마치다 ③ 두르다 ④ 비닐 랩