Kospi hits fresh highs ahead of ex-dividend date

South Korea’s benchmark index Kospi hit a new intraday high on Dec. 28 at 2,834.59 points, just two days before wrapping up the year. However, the rising trend was weakened by individual investors taking nearly 1 trillion won ($912 million) in profit.

On Monday, the Kospi closed at 2808.60 points, up 0.06% from the previous session. Retail investors sold off a net 932.8 billion won ($851 million), while institutional investors bought 854.3 billion won and foreign investors scooped up a net 47.1 billion won, as it was the record date for dividend payouts. 

Market experts say Dec. 29, or the ex-dividend date, will be a turning point that could trigger a market correction since institutional investors' heavy buying backed by demand for dividends may shrink, alongside already weakened foreign investors' buying due to the rise in the won to dollar exchange rate.

“The Kospi is likely to start bearish on Tuesday reflecting the dividends,” said Lee Kyung-min, the head of investment strategy at Daishin Securities. “The amount recovered early on in the market will be important,” said Lee.

Market watchers say investors should also pay close attention to trading trends on Dec. 30, the last trading day of the year, as the stock market is expected to move based on year-end profit-taking and anticipation for next year.

The buying trends between Dec. 29 and 30 are expected to lay the groundwork for the Kospi's movement going forward. The Kospi will reopen on Jan. 4, 2021.

Also, the country's export performance is likely to directly impact the bourse, given that strong exports were the driving force behind the Kospi's rise this year. The securities industry predicts December exports will increase by 5.4% compared to the previous month.

"We may need an export surprise to push up the Kospi. We're likely to see increased volatility for some time if December exports fall short of the estimated range," said Lee.

Other factors that may affect the Kospi include the upcoming Thursday announcement of the China Purchasing Managers' Index (PMI) and the US releasing its latest jobless claims, as the stock market may react sensitively if economic indicators do not look favorable, Lee said.

Meanwhile, some say that falling share prices could be an opportunity to buy, given that the stock market is expected to maintain a bullish trend in the long term.

Write to Eui-myung Park at uimyung@hankyung.com
Danbee Lee edited this article.