Korea’s stock markets rise most among majors; beat S&P 500, Nasdaq gains

South Korean bourses on Wednesday wrapped up this year's trade at their highest levels of the year, rising the most among major equity markets and beating bigger rivals such as the S&P 500 and the Nasdaq.

The Korea Exchange’s benchmark Kospi index closed up 1.88% at a record 2,873.47 points on Dec. 30, the last trading day of 2020. The tech-heavy junior Kosdaq market finished 1.15% higher at 968.42.

For all of 2020, the Kospi has advanced 32.1%, outperforming its peers in advanced countries. While the US S&P 500 index has risen 14.4% from the start of the year, the Shanghai Stock Exchange Composite Index gained 10.6%. Japan’s Nikkei 225 has climbed 18.3%.

Korea’s junior Kosdaq market rose 43.6% this year, beating its US counterpart Nasdaq, which finished up 41.3%.

SANTA CLAUS RALLY

Seoul’s main bourse started the final week of 2020 on solid footing in a so-called Santa Claus rally, hitting fresh highs every day, driven by ample liquidity amid ultra-low interest rates and the stronger Korean currency versus the dollar.

From this year’s annual low in mid-March, the Kospi has risen 93.9%, while the Kosdaq has climbed 126%.

The major equity indexes’ outstanding performance was led by individual investors, who have become the main buying force on both markets, providing firm support even when foreigners and local institutions were panic selling amid fears of a coronavirus-driven slowdown.

On the Kospi market, retail investors, widely known as “the Ants,” bought a total 47.78 trillion won ($44 billion) of shares this year. Foreign investors sold a net 24.73 trillion won worth of shares and domestic institutions unloaded 25.64 trillion won in stocks.

With hefty gains, Korea’s individual investors have also shed their image as “the usual losers.”

BIO, BATTERY, INTERNET, GAMES OUTSHINE

Their purchases have focused on bio, batteries, Internet and gaming (BBIG) stocks, many of which outperformed traditional growth and cyclical stocks.

The combined market capitalization of seven major BBIG stocks, including LG Chem Ltd., Naver Corp. and Celltrion, reached 307.4 trillion won as of Dec. 30, up from 146.4 trillion won a year earlier.

The market cap of Korea's market bellwether Samsung Electronics Co., including its preferred shares, has risen to 544.12 trillion won.

Analysts say the Korean stock markets will continue their upward trend into next year amid strong interest from the Ants and foreign investors, who prefer Korean stocks over their Asian peers because of the country’s resilient economic growth and firmer local currency.

The Korean stock markets will reopen on Jan. 4, 2021.

Write to Eui-Myung Park at uimyung@hankyung.com
In-Soo Nam edited this article.