Analysts predict improved sentiment, foreign investment to push market up


Equity analysts projected Seoul shares to continue their rally for the next few months with improving business sentiment and earnings expectations, especially as capital injections continue from advanced countries.

Oh Tae-dong, a strategist at Taurus Investment & Securities, forecast the benchmark KOSPI to reach up to 2,300 by the end of June, before it fluctuates more heavily in the second half due to policy risks and possible slowdowns in retail.

“The massive outpouring of liquidity from Europe will continue driving emerging market stocks higher. The rally will especially be noticeable in IT, mechanics, chemicals, contractors and financial shares,” Oh said.

He, however, noted the volatile oil price movement as a major risk to business sentiment here.

“Should oil prices go higher than the level now, it would lead to a serious cut in consumer spending. But unless the Dubai crude reaches $135 a barrel, it won’t be a serious threat to Korea’s economy,” he added.

KOSPI advanced a little more than 1 percent this year and now challenges the 2,050 level. It closed at 2,026.12 Thursday after losing 1.11 point.

Yoo Seung-min, chief strategist at Samsung Securities, said while the upturn will continue this month and next, the rally will be capped at 2,100.

“The rally driven by the increased liquidity from Europe is slowly drying up. I don’t expect pension giants to be aggressive in their buying for the next few months, so the rise will be somewhat moderate,” Yoo said.

Many picked IT shares to rise higher. Park Young-ju of Woori Investment & Securities and Kim Young-chan of Shinhan Securities said earnings at Samsung Electronics and Hynix Semiconductor will rise and lift their stocks. Financial shares will advance even if external risks intensify due to their domestic-oriented business model, some said.

“Hana Financial Group should be a value stock this year if it successfully completes the acquisition of Korea Exchange Bank, which seems to be the case so far. Shares will reflect that,” said Choi Jeong-wook, an analyst at Daishin Securities.

By Cynthia J. Kim (cynthiak@heraldcorp.com)