Seoul shares posted their biggest weekly gain in 1-1/2 months on Friday, powered by heavy foreign buying as global index compiler FTSE will give South Korea's share market developed market status, beginning on Monday. Foreign investors led the buying spree for an eleventh consecutive day, snapping up SK Energy and Daewoo Shipbuilding, and made their net purchases the largest for a single day since early October, 2007.
"Foreign active funds have bought the most this week, picking stocks in relation to the FTSE move," said a fund manager at Consus Asset Management, adding that whatever he dumped were easily absorbed by foreign buyers. South Korea has been up to now grouped as an advanced emerging market by the FTSE, which offers benchmark indexes for pension funds, sovereign wealth funds and other fund managers.
"From next week, (foreign) passive funds such as index funds will follow in. But the degree of buying will be tailing off. There will be some attempt at reversing what had been pushed up eccentrically this week," the fund manager said. The Korea Composite Stock Price Index edged up 0.25 percent to 1,699.71 points, the highest close since late June 2008, although off its session high of 1,713.22.
On the week, it gained 2.9 percent, the biggest weekly rise since the last week of July when it advanced 3.6 percent. Shares in SK Energy, the country's top refiner, trimmed gains to end up 2.6 percent to 117,000 won, amid expectations about refining margin improvement and its plan to churn out rechargeable batteries.
Daewoo Shipbuilding & Marine Engineering, the world's No 3 shipbuilder, rose 3.9 percent. But trade held to a tight range, with local institutions facing heavy redemption calls as the past six-month rally increased investors' desire to cash in on the gains, amid concerns about the negative impact of the strengthened won on exporters. Hyundai Motor turned lower to close down 1.8 percent, after it unveiled a new model of its flagship mid-sized sedan with stylish exterior and more features on Thursday.