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Korea ends flat but foreign buying balloons

SEOUL: South Korea's benchmark index ended flat on Friday but the bland finish concealed a feisty battle as net buying by foreign investors surged to a high for the year and domestic investors sold heavily, analysts said.

Foreign investors, as they did on Thursday, snapped up electronics shares, they said.

The Korea Composite Stock Price Index (KOSPI) closed up 0.17 point or 0.02 percent at 894.83."Foreign investors are the sole buying force in the main market with the buying centring on just a few electronics titles," said Kim Ki-tae, a director with Indosuez Securities.

Foreign investors bought a net 855.8 billion won worth of shares an official at the Korea Stock Exchange said.

Of the total, about 700 billion won was poured into just two electronics titles, Samsung Electronics and Hyundai Electronics, the official said.

Analysts noted prices of Samsung Electronics' overseas depositary receipts (DR) rose overnight to nearly 380,000 won, widening the gap with its local prices, which sparked the rampage by foreign buyers.

Samsung Electronics, the world's largest memory chip maker, closed up 2.04 percent at 300,000 won, while its prepared shares hit its daily upper limit, gaining 17,500 at 135,500 won.

Hyundai Electronics added 14.8 percent to 23,600 won. Investment trusts, the largest players in the local equity market, continued to sell, raising funds to meet redemptions of equity-linked beneficiary certificates in funds they manage, analysts said.

"Despite the frenzy in foreign buying, domestic selling capped the sharp rise in the main index," said Kang Shin-woo, a fund manager at Hyundai Investment Trust Management Co.

Retail investors sold a net 594.4 billion won worth while domestic institutions sold a net 278.7 billion won worth.

March KOSPI futures index: closed down 1.10 points at 112.00, while the underlying KOSPI spot index added 0.25 point to 112.48.

The narrowing spread between the spot and futures indices triggered about 170 billion won in futures-linked sales which also contributed to paring the KOSPI's gains, analysts said.-Reuters