[Good Morning Stock Market] "Even Adding Liquidity Effects to Fundamentals, Elastic Rise Is a Challenging Phase"

[Asia Economy Reporter Eunmo Koo] An analysis estimates the appropriate KOSPI level, evaluated based on exports which are inseparable from the Korean stock market, to be around 2000 points, with additional upside potential due to liquidity close to 10%. However, even considering all these factors, the current index level is assessed as a level where price pressure may be felt rather than a resilient rise.

◆Byunghyun Cho, Researcher at Yuanta Securities=It is already well known that there is a high correlation between export amounts and the KOSPI level. Export amounts for April and May have dropped to the $30 billion range, and the average export amount from January to May is around $40.2 billion. Using regression analysis between export amounts and the KOSPI since 2000 to estimate the appropriate KOSPI, the index level near 2000 points can be explained by the current export level (monthly average of $40 billion).

Currently, the reflection of liquidity is considered higher than fundamentals compared to usual times. In the past, when the Fed showed an aggressive policy stance and asset size surged, the KOSPI subsequently showed additional upside potential of about 10% compared to the modeling results.

As a result, even when considering fundamentals and liquidity simultaneously, the area above 2200 points is judged to be a level where price pressure may form based on current fundamental conditions. Of course, there is a possibility that the upper range could increase as the export cycle recovers due to normalization of trading partner economies following lockdown lifting and the introduction of full-scale growth policies. However, at least with the current combination of variables, it is judged to be a level where price pressure may be felt.

◆Sangyoung Seo, Researcher at Kiwoom Securities=Despite concerns over a resurgence of COVID-19 in the U.S., the U.S. stock market rose led by sectors benefiting from this. Although the Korean stock market has already priced this in, expectations for additional U.S. stimulus policies are expected to have a positive impact. Additionally, the weakening of the U.S. dollar against other currencies raises the possibility of won appreciation, which could positively affect foreign investor demand, making the outlook favorable.

Of course, the fact that the resurgence of COVID-19 in the U.S. is becoming a foregone conclusion is a burden, as it increases the likelihood of a slowdown in U.S. consumption and subsequent industrial production weakness, which could reduce Korea’s exports to the U.S. Considering this, the Korean stock market is expected to rebound strongly with buying interest following yesterday’s decline, but rather than the index, a concentration on individual stocks is expected, showing a stock-specific market. In particular, attention is needed as expectations for improvements in manufacturing and services PMIs in the U.S. and Europe, to be announced in the evening, could bring in rebound buying in cyclical stocks.

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