[Weekly Market Outlook] Starting January with Optimism for the 'KOSPI 3000 Era'..."Upside Potential Remains"

[Asia Economy Reporter Oh Ju-yeon] Although the domestic stock market bears the burden of the sharp rise in November and December last year, an analysis suggests that there is still room for growth in January this year, drawing attention.

According to KB Securities on the 3rd, this year’s KOSPI net profit is expected to increase by 52.3% compared to the previous year, reaching 135.6 trillion won. This is because the COVID-19 vaccination schedule has been accelerated, advancing the semiconductor super cycle from the originally expected second quarter to the first quarter, and earnings estimates for cyclical and domestic sectors are also being revised upward. The steep weakening of the dollar is seen as adding momentum to the rebound in commodity prices, acting as a catalyst for the earnings recovery of cyclical sectors.

In this atmosphere, the January stock market is expected to see positive effects from the absence of a clear 'external force' suppressing the bull market, as well as expectations for '4th quarter earnings' and the 'Biden administration.' The ratio of 4th quarter earnings surprises is high, and it is analyzed that the newly inaugurated U.S. President Joe Biden will rapidly introduce policies that are distinct from the previous administration.

Lee Eun-taek, a researcher at KB Securities, said, "The KOSPI, which surged sharply in the short term, may enter a short-term lull due to the exhaustion of factors such as vaccines and additional stimulus measures, but it is not a situation that requires profit-taking." He added, "There are two positive factors that will lead to a market rebound in January: the 4th quarter earnings will prove to be surprises, and from mid-January, expectations for the Biden administration will move the market." However, he pointed out risks to watch out for in January, including the resurgence of COVID-19, lockdown policies restricting outings, and the U.S. Georgia state election.

Samsung Securities presented the expected KOSPI band for January as between 2750 and 2950 points. They explained that the global macro environment around the year-end and New Year, led by the U.S. 4th quarter GDP, inevitably carries a neutral to negative tone. Additionally, the upcoming U.S. Georgia Senate runoff election on the 5th is expected to limit expectations for the Biden administration’s policies and potentially reignite political uncertainty. This is expected to lead to a slowdown in the upward momentum of both domestic and international stock markets.

However, the target band for the KOSPI this year was revised upward to between 2700 and 3300 points. Kim Yong-gu, a researcher at Samsung Securities, said, "The process of narrowing the gap between hot expectations (Sentimental) and cold reality (Fundamental) may reduce the upward momentum of the stock market in January, but considering that the KOSPI this year is supported by the rush of COVID-19 vaccine and treatment development and vaccinations, strengthening expectations for global economic recovery after 2021, the current earnings momentum is among the top globally, and the earnings visibility guaranteed by the semiconductor super cycle as well as the earnings growth trend driven by the economy and policies, the upper limit of the KOSPI this year can be revised upward to 3300 points."

He also stated, "The current 2021 KOSPI operating profit consensus implicitly assumes the rapid normalization of earnings to the level of 186 trillion won, which was the starting point of the major bull market in 2017," adding, "This means that earnings momentum could be the key driver for the KOSPI to settle above 3000 points in the Korean stock market in 2021."

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