[Weekly Market Outlook] KOSPI Focused on 'Period Adjustment'

Possibility of Further COVID-19 Spread Leads to 'Wait and See' Approach
"Market Driven by Individual Stocks Rather Than Indices"

[Asia Economy Reporter Oh Ju-yeon] Amid the domestic stock market showing volatile fluctuations due to concerns over the resurgence of COVID-19, analysis suggests that cautious sentiment will prevail ahead of major global events in the last week of August. It is expected that the KOSPI's bullish trend will take a breather for the time being as the spread of COVID-19 appears to be calming down.

The KOSPI opened at 2370.87, up 22.63 points (0.96%) from the previous trading day (2348.24). On the 19th, stock prices including the KOSPI were displayed on the electronic board in the dealing room of Hana Bank in Jung-gu, Seoul. On the same day, the won-dollar exchange rate opened at 1182.5 won, down 1.2 won from the previous trading day (1183.7). Photo by Kim Hyun-min kimhyun81@

According to the Korea Exchange on the 23rd, the KOSPI reached an intraday high of 2458.17 on the 13th, setting a new yearly peak, but then fell for four consecutive trading days, closing at 2274.22 on the 20th. Although it rebounded above the 2300 level on the 21st, there are predictions that cautious sentiment will continue as investors watch for the possibility of further COVID-19 spread.

Hana Financial Investment forecasted that the KOSPI will move between 2210 and 2320 during the fourth week of August (24th?28th). While some rebound buying may flow into the domestic market as overheating concerns from the previous week have eased, they assessed that the uncertainty surrounding COVID-19 will likely cause a short-term individual stock market. Researcher Lee Jae-sun stated, "It is necessary to pay attention to the volatility of COVID-19 related stocks such as diagnostic kits and online education."

KB Securities also explained that short-term strategies can be formulated based on COVID-19 and the dollar outlook. KB Securities researcher Lee Eun-taek mentioned, "Experts believe that more time is needed until the spread of COVID-19 is contained," adding, "This is a pressure factor on the Korean stock market."

Lee predicted, "However, since the impact on corporate profits is limited if the spread is only domestic without overseas resurgence, the 2200-point resistance line is unlikely to be consistently breached downward."

The dollar is expected to remain slightly weak until the end of the year. Although the dollar's weakness has progressed rapidly for a while, uncertainties expected in the fall and the euro long positions rising to an all-time high are seen as burdens.

Lee added, "There are warnings from experts that a second global COVID-19 pandemic could occur in September and October," and "Events that could affect domestic supply and demand, such as the strengthening of major shareholder tax requirements or the extension of short-selling bans, also need to be absorbed."

NH Investment & Securities projected the KOSPI range for the fourth week of August to be between 2200 and 2300.

While the possibility of an additional U.S. stimulus package is considered an upward factor, the absence of signals for further accommodative monetary policy, additional U.S. retaliations against China, and the domestic spread of COVID-19 are cited as downward factors.

Researcher Noh Dong-gil said, "In a situation where the stock market is likely to show a period of adjustment, an investment strategy that bets on sectors and stocks rather than the index is necessary," adding, "In a situation where concerns about domestic and global COVID-19 outbreaks are high, untact-related sectors and defensive stocks could be relatively better alternatives."

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