The KOSPI 3000 Era Opens in the First Half of This Year

Continued Individual Buying Driving Last Year's Stock Market
IT Sector Promising with Earnings Improvement Expectations
Stimulus Measures and COVID-19 as Variables in Each Country

The KOSPI index surpassed the 2,900 mark intraday for the first time on the 4th, the first trading day of 2021. It is interpreted that strong buying by individual investors led the index's rise. Dealers are working at the Hana Bank dealing room in Euljiro, Seoul on that day. Photo by Moon Honam munonam@

[Asia Economy Reporter Song Hwajeong] As the KOSPI surpassed the 2800 mark last year, setting an all-time high, domestic securities experts unanimously predicted that the KOSPI will enter the 3000 era this year. The buying momentum from individual investors, which led the stock market last year, is expected to continue, and the IT sector, anticipated to show improved earnings, was identified as a promising industry this year. The index continued its upward trend, exceeding 2890 at the market opening.

On the 4th, Asia Economy surveyed heads of research centers at major securities firms about this year's expected KOSPI range, finding the average low point at 2517 and the average high point at 3150. Most securities firms forecast that the KOSPI will surpass 3000 this year, with the timing of reaching 3000 expected to be in the first half of the year. Kim Hyungryeol, head of the Kyobo Securities Research Center, said, "The Korean stock market recorded one of the highest annual returns last year, and notably, the driving force behind the stock price rise was domestic liquidity, which raises expectations for this year." He added, "Similar to right after the financial crisis, the resistance at a 12-month expected price-to-book ratio (PBR) of 1.1 for the KOSPI is not strongly considered. Assuming the PBR exceeds 1.2, the KOSPI is expected to open the 3000 era."

Yoon Changyong, head of the Shinhan Financial Investment Research Center, said, "The KOSPI is expected to reach its peak between the end of the first quarter and the second quarter," adding, "Since stock prices are rising ahead of the distribution of COVID-19 vaccines and economic recovery, the timing of the peak could be sooner than expected."

The buying momentum from individual investors is also expected to continue this year. Last year, individuals net purchased about 64 trillion won in the domestic stock market, leading the KOSPI's rise. Shin Dongjun, head of the KB Securities Research Center, said, "Individual funds will begin active buying from January," noting, "Although there is usually a tendency for net selling at the end of the year due to major shareholder taxation issues, the current large accumulation of customer deposits suggests that buying momentum can intensify from January." Yoon added, "The active participation of individuals in the stock market is not only due to increased follow-up trading from rising stock prices but also because the perception that stocks are the only alternative has grown." He analyzed, "Despite the individual investor buying rally, the proportion of stocks in household financial assets is lower than during the 2007 stock market boom, so individuals are likely to continue leading the market this year. Even if they do not lead the rise, they can at least solidify the lower boundary of the index."

Foreign buying momentum is also anticipated. Jung Yeonwoo, head of the Daishin Securities Research Center, said, "If the won-dollar exchange rate stabilizes below the 1100 level, foreign net buying is likely to flow in steadily."

Positive factors expected to influence the stock market this year include continued economic stimulus policies by various countries, sustained individual buying momentum, and corporate earnings improvements, while prolonged COVID-19 was cited as a negative factor. Oh Hyunseok, head of the Samsung Securities Research Center, said, "The reflationary policy environment (expansionary fiscal policy + accommodative monetary policy) of major countries, the rush for COVID-19 vaccine and treatment development and administration, and the rapid normalization potential of Korean export conditions and corporate earnings based on semiconductor and Chinese macroeconomic recovery are positive factors for the stock market." He added, "On the other hand, delays in securing COVID-19 quarantine control capabilities and the dilution of policy momentum due to renewed political uncertainties are negative factors."

Promising sectors this year include IT, expected to recover with the semiconductor industry, as well as bio and secondary batteries. Lee Kyungsoo, head of the Meritz Securities Research Center, said, "Semiconductors, secondary batteries, and electric vehicles (including automobiles and auto parts) are expected to be promising." He added, "These sectors not only benefit from industry improvements but also lead the KOSPI's earnings level-up, reflecting the acceleration of technology popularization."

On the first day of the new year, the KOSPI surpassed the 2900 mark. As of 11:30 a.m. that day, the KOSPI stood at 2935.61, up 62.14 points (2.16%) from the previous day. The KOSDAQ rose 2.22 points (0.23%) to 970.64.

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