Kospi closes above 3,000 points for first time

South Korea’s benchmark stock index closed above the 3,000 mark for the first time on Jan. 7, powered by sectors such as telecoms and financial services, which had lagged market rallies over the past few months.

The Kospi index advanced by 2.14% on the day, with the country’s top mobile carrier SK Telecom Co. posting its biggest ever daily gain amid heavy buying from securities companies. SK Telecom jumped by 7.78% to close at 270,000 won ($240.80).

“Breaking the 3,000 mark reflects optimism for improved fundamentals of South Korean stock markets, such as exports growth and earnings improvement on the back of the global economic recovery,” the Korea Exchange said in a statement.

On Wednesday, the benchmark stock index surpassed 3,000 points for the first time in intraday trade, driven by massive buying from retail investors who purchased a net 5.2 trillion won during the first three trading days of this year.

Taking the baton from individual investors, securities firms were the key buyers on Thursday. They purchased a net 1.6 trillion won, offsetting a net 1.1 trillion won worth of selling by retail investors. Foreign investors bought a net 100 billion won on the main bourse. 

Seoul stock markets have been in record-breaking rallies since last November, led by rotational buying from growth stocks such as bio, battery, internet and games to technology giants. Recently, the improved economic outlook gave a lift to economically sensitive stocks such as shipbuilders and construction companies. 

Analysts said heavy retail money inflows into stock markets are helping to shake off the so-called Korea Discount.

“Opening the era of the Kospi 3,000, led by retail investors, has a symbolic meaning that stocks became a key tool for their wealth management,” said Meritz Securities' research head Lee Kyung-soo.

With an increasing number of individual investors shifting from the real estate market in favor of equities, the outstanding balance of their stock deposits topped 68 trillion won for the first time.

SK Telecom broke away from its range-bound trade between 230,000 and 240,000 won seen over the past two months when the broader market soared by nearly 20% to 2,900 points.

The market consensus shows SK Telecom's operating profit is projected to climb by 12.3% to 1.4 trillion won this year. Five-generation mobile services and valuation gains from subsidiaries should drive its earnings higher, analysts said.

Eco-friendly stocks such as Hanwha Solutions Corp. found support from news of the US Democratic Party’s wins in two Senate runoff elections in Georgia, giving Democrats control of the US Senate. President-elect Joe Biden has set energy and climate policy as a top priority. 

LG Group shares also rose sharply on expectations of earnings growth. LG Corp., LG Electronics Inc. and LG Chem Ltd. spiked by over 8%, respectively.

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

The total market capitalization of Kospi-listed companies is estimated to have remained above the nominal GDP level since early last month.

The Kosdaq market for smaller firms ended up 0.76% at 988.86, edging closer to the 1,000 mark.
 
Write to Jae-won Park and Yoon-sang Koh at wonderful@hankyung.com
Yeonhee Kim edited this article.