Market rout hammers domestic stock funds in Oct.

October 31, 2018

SEOUL, Nov. 1 (Yonhap) — South Korea’s domestic stock investment funds suffered big losses in October as the local bourse hit the skids amid a litany of negative leads, data showed Thursday.

Domestic equity funds with a net asset value of 1 billion won (US$880,000) or more chalked up an average return of minus 16.1 percent in the one-month period to Tuesday, according to the data from market tracker KG Zeroin.

Funds that invest in small- and mid-cap issues were the worst performers with an investment return of minus 18.3 percent, followed by those for general stocks with minus 14.9 percent.

Their abysmal performance was attributed to a meltdown in the domestic stock market.

Over the cited period, the benchmark Korea Composite Stock Price Index (KOSPI) nose-dived 14.8 percent, with the index for the tech-laden KOSDAQ market free-falling 23.4 percent.

Overseas equity-linked investment funds also took a hit from the stock market crash, registering a median return of minus 10.3 percent.

Investment funds for Japanese stocks performed the worst during the period with an average yield of minus 12.8 percent, trailed by funds for stocks in emerging Asian economies with minus 12.4 percent and those for Chinese equities with minus 12.2 percent.

In contrast, investment funds for Brazilian stocks posted a stellar return of 20.8 percent, apparently buoyed by the country’s bullish stock market and strong currency ahead of its presidential election.

Brazil’s key stock market index climbed 5.6 percent over the one-month period, the sole gainer among the world’s major stock indexes, with its real remaining strong against the U.S. dollar.

“Investment funds for small- and mid-cap stocks were battered by a sell-off in the KOSDAQ market in October,” said Oh On-soo, a KB Securities analyst. “Emerging markets faced bigger downside volatility due to nagging concerns over a trade war between the United States and China, and a strong greenback.”