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– ‘How far will KOSPI go?’
As KOSPI volatility hit an all-time high last week, experts in the financial investment industry are not easily able to come up with a stock market outlook. After KOSPI recorded a reported price of 3152.18 on the 8th, the market continues to take a breath for a week, giving different prospects. This is the reason for the possibility that the KOSPI will show mixed ups and downs for the time being. The KOSPI 200 volatility index (VKOSPI), the so-called’fear index’, reached a high of 35.65 on the 11th in 7 months. It is unusual for volatility to increase in the KOSPI bull market. This is the reason why the market trend among the ducks, which can not be seen a step ahead, is bound to continue. The US stock market also showed mixed results last week. The S&P 500 index has been fluctuating slightly after hitting an all-time high at 3824.68 on the 8th. Technology stocks that soared in the US stock market since last year’s Corona 19 crisis have also slowed in recent years. For example, Apple’s stock price reached a record high of $132.05 on the 8th, but has been adjusted to $127.14 on the 15th.
Seo Bum-jin, head of Samsung Asset Management’s Growth Division, recently interviewed Maeil Economic Daily and predicted that “it is difficult to predict because stock market volatility has increased due to abundant liquidity,” and “I think the KOSPI will rise and fluctuate after peaking at 3160-3170.” Kim Hak-gyun, head of Shinyoung Securities Research Center, said, “There is still an unpredictable marketplace,” he said. “Because the money is too explosive, large stocks such as Samsung Electronics and Hyundai Motors are moving like small and mid-cap stocks.”
According to the Korea Exchange, last week, individuals bought a whopping 9.82 trillion won in the securities market. The power of’Donghak ants’ lies behind the 3-4% movement of Hyundai Motor’s stock price, which has a market cap of 51 trillion won. In the same period, institutional investors sold 8.68 trillion won. If the struggle between individuals and institutions continues, the KOSPI will inevitably show a mixed trend for the time being. “The institution has sold a lot recently, but the volatility is expected to increase according to the flow of foreign investment funds. This is likely to end with a short-term adjustment, and Samsung Electronics and Hyundai Motors are expected to see good results. I think it is,” he emphasized.
Jeong Yong-taek, head of IBK Investment & Securities Research Center, said, “It is difficult to predict whether the KOSPI will settle at 3100 for the time being,” he said. “No matter how much an individual accumulates stock market funds, if foreigners and institutions continue to sell, there will be limits.”
According to the Korea Exchange, the Buffett Index, which diagnoses whether the stock market is overheated, reached a record high of 130.2% last year. This is the ratio of the market capitalization to the nominal gross domestic product (GDP), and the KOSPI recorded three digits only twice in 2000, when the information technology (IT) bubble was severe, and in 2007, when it was overheating just before the global financial crisis. “We believe that volatility will increase due to the short-term overheating,” said Seoh. “Foreigners and institutions continue to sell, and this will continue until early this week.” “Because the expectations are high now, there may be adjustments in the process of narrowing the gap with fundamentals (intrinsic value),” he added. “It seems that the recent 10-15% of the stock price has been highly valued.”
Although the KOSPI is heading towards overheating, there is also a diagnosis that it will rise further in the mid to long term.
It is an analysis that the stock price is rising thanks to the power of liquidity released all over the world, so it is highly likely that leading stocks such as semiconductors and batteries will gain more strength. “The indicators that estimate the profits and GDP of companies are not properly reflecting the future value. From the KOSPI 2500, the analysis that it is overheated has already reached 3200,” said Lee Kyung-soo, head of the Research Center at Meritz Securities. “Because this doesn’t fit, the traditional way of calculating it may not be right.” Director Lee added, “We expect companies to increase their earnings forecast by 20% next year,” he added. “If we see the KOSPI 2800 as an appropriate value, we think that it will be able to go up to 3500 by reflecting this.”
Some analysts say that industries with high future value, such as semiconductors, eco-friendly, and media, should be kept on track. For the time being, the KOSPI may continue to fluctuate, but the global economy is highly likely to continue to change. After US President-elect Joe Biden took office on the 20th, it is highly likely that this trend will be officially formulated. Shim Hyo-seop, head of KB Asset Management’s Equity Management Division, said, “Electric vehicle batteries, which are leading the global trend, and semiconductors, whose industry conditions are improving from this year, will continue to be promising.”
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