South Korea's stock funds have suffered massive redemptions in the first three weeks of this year apparently on profit-taking, data showed Wednesday, as no further momentum is expected in the equity market dogged by uncertainties.
Domestic stock funds, excluding exchange traded funds, posted 1.03 trillion won ($850 million) of net outflow this year as of Monday, according to fund information provider KG Zeroin.
An image of stock funds. (Yonhap)
It came after a total of net 7.9 trillion won outflow from local stock funds last year. Market watchers pointed out that the net outflow has quickened this year.
They said investors appear to believe that the benchmark Korea Composite Stock Price Index has neared the top of the tight range. On Tuesday, the KOSPI finished at 2,065.76 points.
"As the index surged, traders are apparently seeking to lock in recent gains," Oh On-soo, a KB Securities analyst, said. "Amid political and economic uncertainties at home and abroad and no special momentum in sight, such a net outflow trend is forecast to continue at least through the first half (of this year)."
Moon Soo-hyun, a researcher at NH Investment & Securities, echoed the view.
"Capital is flowing into private equity funds with relatively stable performance," Moon said. "Furthermore, the KOSPI remains in the tight range. So, capital outflow from domestic stock funds is likely to last for the time being." (Yonhap)
