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Stock rally likely to continue until end of 2016: analysts
By Korea HeraldPublished : Aug. 23, 2016 - 16:56
The recent buoyancy of the Korean stock market is forecast to persist until the end of the year, according to numerous market analysts.
The pessimism that ran deep in the local financial market, as the country’s main benchmark Kospi remained at around 1,900 points until early this year, has faded away with the index replacing its previous records for the year’s new highs in the past week.
The benchmark Kospi closed at 2,049.93, gaining 7.77 points from the previous trading session.
Analysts are betting on the Kospi continuing to soar to the band of 2,100 to 2,160 points by the end of this year, citing their expectations on better performances of major industries such as energy, semiconductor and display panels.
“Companies are forecast to reach their peaks in earnings growth for the rest of the year,” said Lee Kyung-soo, a quant analyst at KB Investment & Securities. “Kospi-listed firms are estimated to obtain 20.4 percent growth in their earnings in 2016, the highest in the last five years.”
“The recent rallies in large-cap shares such as Samsung Electronics signal that there are rising expectations on an overall recovery in the economy,” said Yoon Ji-ho, the head researcher at eBest Securities.
But some were skeptical about the Kospi escaping the so-called “Boxpi,” referring to the index being kept in the range of between 1,800 and 2,100 points for the past 10 years.
“Uncertainties stemming from major events outside the country such as the US presidential election and the Fed rate hike would keep the Kospi within the box,” said Lee Sang-hwa, the head of research at Hyundai Securities.
The US Federal Reserve is highly expected to raise its borrowing rate in September or December for the second time this year, before or after the November election, Lee said.
“The events, however, would not have a negative impact on attracting foreign funds, because great rotations in the global fund flows in the wake of such events would typically lead investors from safe assets to riskier ones,” he said.
Despite concerns of downward risks growing in the Chinese economy and jitters from Britain’s vote to leave the European Union, the Kospi is likely to remain bullish throughout the year, owing to the government’s supplementary budget execution and increases in business earnings, Lee added.
By Song Su-hyun (song@heraldcorp.com)
The pessimism that ran deep in the local financial market, as the country’s main benchmark Kospi remained at around 1,900 points until early this year, has faded away with the index replacing its previous records for the year’s new highs in the past week.
The benchmark Kospi closed at 2,049.93, gaining 7.77 points from the previous trading session.
Analysts are betting on the Kospi continuing to soar to the band of 2,100 to 2,160 points by the end of this year, citing their expectations on better performances of major industries such as energy, semiconductor and display panels.
“Companies are forecast to reach their peaks in earnings growth for the rest of the year,” said Lee Kyung-soo, a quant analyst at KB Investment & Securities. “Kospi-listed firms are estimated to obtain 20.4 percent growth in their earnings in 2016, the highest in the last five years.”
“The recent rallies in large-cap shares such as Samsung Electronics signal that there are rising expectations on an overall recovery in the economy,” said Yoon Ji-ho, the head researcher at eBest Securities.
But some were skeptical about the Kospi escaping the so-called “Boxpi,” referring to the index being kept in the range of between 1,800 and 2,100 points for the past 10 years.
“Uncertainties stemming from major events outside the country such as the US presidential election and the Fed rate hike would keep the Kospi within the box,” said Lee Sang-hwa, the head of research at Hyundai Securities.
The US Federal Reserve is highly expected to raise its borrowing rate in September or December for the second time this year, before or after the November election, Lee said.
“The events, however, would not have a negative impact on attracting foreign funds, because great rotations in the global fund flows in the wake of such events would typically lead investors from safe assets to riskier ones,” he said.
Despite concerns of downward risks growing in the Chinese economy and jitters from Britain’s vote to leave the European Union, the Kospi is likely to remain bullish throughout the year, owing to the government’s supplementary budget execution and increases in business earnings, Lee added.
By Song Su-hyun (song@heraldcorp.com)
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Articles by Korea Herald
