[Good Morning Stock Market] Will KOSPI Surpass the '2500 Level'... The Variable is the Spread of COVID-19

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[Asia Economy Reporter Jihwan Park] With the KOSPI rising more than 10% this month, market attention is focused on whether it will break through the 2,500 level for the first time in two and a half years. Experts expect that how well the domestic COVID-19 spread is controlled amid the novel coronavirus (COVID-19) pandemic will be a key variable in sustaining the KOSPI's upward trend.

◆ Sangyoung Seo, Researcher at Kiwoom Securities: The Korean stock market is expected to experience increased volatility as the surge in COVID-19 cases in the US and Europe is perceived as both positive and negative. The rise in COVID-19 cases in major advanced countries is positive in that it leads to a contraction in industrial production, which could expand import demand from emerging markets including Korea. However, the spread of COVID-19 is expected to have a negative impact as it may cause a global economic slowdown. Although positive clinical data related to COVID-19 vaccine development have been announced, actual vaccinations are unlikely to proceed until the second half of next year, making increased volatility inevitable. This week, there are many meetings of major international organizations regarding COVID-19 response, and Federal Reserve officials are making daily remarks related to economic outlooks. These developments could raise the possibility of an economic slowdown, which has been largely ignored until now, drawing attention. Furthermore, the fact that real economic indicators from the US and China may underperform expectations is also a concern.

◆ Kwanghyun Kim, Researcher at Yuanta Securities: The KOSPI index rose 10% in November alone, approaching the 2,500-point mark. Positive factors included maintaining the major shareholder threshold at 1 billion KRW, Biden’s election victory, and vaccine development news from Pfizer-BioNTech. The announced Q3 earnings and export data were also not bad. Above all, the current market environment, which reacts more sensitively to positive news than negative, seems to have driven the rapid rise.

The monthly 10% increase in the KOSPI index has occurred only once since 2010, which was in April this year. After the sharp drop in March, the 11% rise in April is the only double-digit return recorded in the past decade. Korean stock market gains stand out even compared to major global countries. Relatively effective control of COVID-19 and the attractiveness of the stock market due to a declining exchange rate are considered reasons for net foreign buying. However, the recent sharp decline in the KRW-USD exchange rate to the 1,110 level and the possibility that the premium for Korea, which has relatively well-controlled COVID-19, may weaken if vaccine efficacy is proven, are factors to watch closely going forward.

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