[Weekly Market Outlook] "Weak Dollar Trend Stimulates Foreign Buying... Index Still Has Room to Rise"

Stimulus Measures Pouring In from Various Countries Also a Positive Factor
"Even if the Index Rise Narrows, the Upward Trend Will Continue"

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[Asia Economy Reporter Minwoo Lee] As the dollar continues to weaken, there is a forecast that foreign buying momentum may still persist. The market is expected to have remaining potential for index gains as liquidity continues to be steadily supplied.

According to the Korea Exchange on the 7th, last week (1st to 5th), the KOSPI closed at 2181.87, up 7.5% (152.27 points) from the last trading day of the previous week (29th). At one point during the week, it even surpassed the 2190 level, showing an overall upward trend. Institutions and foreigners net bought 1.7586 trillion KRW and 434.4 billion KRW respectively, while individuals net sold 2.0674 trillion KRW. Despite concerns such as the US-China trade conflict and intensified protests against racial discrimination, the market showed an upward trend. Expectations for economic reopening outweighed the worries.

There is an analysis that the liquidity-driven market will continue this week as well. Samsung Securities researcher Jung-hoon Seo explained, "Although the global stock market overall faces price burdens, the high prices themselves are insufficient grounds for a decline," adding, "This is because the unprecedented scale of liquidity supplied by central banks supports the rise in stock market multiples."

Above all, the dollar's weakness suggests that the liquidity-driven market could be extended further. Researcher Seo said, "The dollar index, which fluctuated over 100 points just two weeks ago, has fallen to the mid-96 range, forming a clear downward trend," explaining, "This not only increases the attractiveness of non-dollar-denominated assets but also reduces costs for companies outside the US and contributes to trade activation, which could further stimulate expectations for economic activity resumption." Additionally, rising prices of crude oil and other commodities were cited as favorable factors for emerging markets including Korea.

In particular, due to Korea's small open economy characteristics, its stock market is highly sensitive to the economy, so expectations for economic reopening are more strongly reflected. Researcher Seo predicted, "Since the top market capitalization stocks have relatively rested, they are expected to benefit from the current rotation flow," and added, "Despite large-scale profit-taking, the index's downside is expected to remain firm due to factors such as customer deposits that have not decreased."

Various ongoing economic stimulus measures were also presented as grounds for expecting further stock market gains. Daishin Securities researcher Namjoong Moon said, "Unlike typical processes of stock market crises such as bottom formation, rebound, correction, and transition to rise, this unprecedented situation involves extraordinary policy responses pouring out since March to overcome the COVID-19 crisis," and forecasted, "With Germany releasing an additional 130 billion euros (about 178 trillion KRW) in stimulus this month and the US preparing a fifth stimulus package exceeding 2.1 trillion dollars (about 2539 trillion KRW), the second round of liquidity injection is spreading, so although the stock market's upward momentum may slow, the upward trend will continue."

This content was produced with the assistance of AI translation services.