Next Year's Stock Market Keywords: 'Jeonyak Hugang, Hyeoncha Samjeon, Metaverse'

KOSPI 3600~2780 Next Year
Led by Automobiles, Semiconductors, and Contents

[Asia Economy Reporter Junho Hwang] After this year's dominant bull market, the stock market is expected to show a pattern of weakness followed by strength next year. The KOSPI is projected to drop to around 2700 before rising up to 3600. The reopening of the economy with the With Corona policy is expected to support the downside, while interest rate hikes are likely to limit the upside. Investors' calculations may become more complex, but securities firms forecast that sectors such as automobiles, semiconductors, and content will lead the stock market next year.

KOSPI to Hold Minimum of 2780

On the 2nd, the KOSPI index showed strong performance in the early session due to net buying by foreigners and institutions. Dealers are working in the Hana Bank dealing room in Euljiro, Seoul. Photo by Mun Ho-nam munonam@

According to the 2022 stock market outlook from nine domestic securities firms on the 2nd, the lowest point for the KOSPI next year is expected to be between 2780 and 2900. This is about 4.61% lower than this year's lowest closing price of 2908.31 recorded on the 6th of last month.

The securities firms believe that the KOSPI's correction, which began in the third quarter of this year, is likely to continue into early next year. Although the economy will reopen due to With Corona, the impact of the U.S. tapering is expected to strongly affect the domestic stock market. Seungchang Yoo, Head of Research at KB Securities, said, "When the Federal Reserve announces tapering and begins reducing asset purchases at the end of the year or early next year, market volatility may repeat. After this period, the stock market will bottom out, and the economic cycle will prepare to rebound in the second half of next year." Sungno Kim, a researcher at BNK Investment & Securities, added, "Since the third quarter of this year, falling semiconductor prices, concerns about earnings, and declining confidence in economic recovery have weighed on the KOSPI. If semiconductor distribution increases in the second quarter of next year, leading to a stabilization of the leading economic indicators and commodity prices, a favorable environment for the domestic stock market will be created."

The upper range for the KOSPI suggested by securities firms is around 3600 to 3280. The highest point of 3600 is about 8.91% higher than this year's peak closing price of 3305.21 recorded on July 6, marking an all-time high.

Starting with Hyundai Motor... Next is Samsung Electronics

The sectors expected to lead the stock market next year are automobiles, semiconductors, content, and eco-friendly industries. These sectors tend to experience rapid demand growth during economic expansion phases. Hyungryul Kim, Head of Research at Kyobo Securities, said, "Sector-specific responses will be necessary until the first half of next year. Due to supply chain disruptions, rising raw material prices, and interest rate beneficiaries, automobiles, steel, transportation, banking, and energy are highlighted."

In particular, for automobiles, as the Delta variant is controlled in the ASEAN region, a global IT value chain hub, and factory operating rates increase, foreign investors' interest is likely to rise. Changyong Yoon, Head of Research at Shinhan Financial Investment, said, "We expect foreign investors to switch to net buying in the first half of next year as production disruptions peak. The price rebound of automobile stocks producing finished products will lead, followed by semiconductor stock recovery, which has a longer lead time from intermediate goods to finished product shipments."

Samsung Electronics, which accounts for 21.83% of the domestic stock market capitalization, is expected to see stock price improvement only in the second half of next year. This is due to a mixed situation involving semiconductor industry slowdown, heightened earnings expectations (operating margin 20.1%) from securities firms, and exchange rates. Seungwoo Lee, Head of Research at Eugene Investment & Securities, stated, "While the semiconductor industry conditions have already been partially reflected in the stock price, the second quarter of next year is expected to be a critical point, after which supply and demand stabilization is anticipated."

Service content such as the metaverse, which has gained interest from the MZ generation since this year, is also expected to be a leading sector for the KOSPI next year. Jaeseon Lee, a researcher at Hana Financial Investment, said, "Although the metaverse is in its early stages, it is a sector attracting concentrated interest from the MZ generation. The scale of funds flowing into individual companies and exchange-traded funds (ETFs) linked to domestic and international metaverse themes is expected to continue expanding."

Additionally, eco-friendly sectors such as secondary batteries, hydrogen, nuclear power, solar and wind power, and other renewable energies are also considered key themes for next year's stock market. Euntaek Lee, a researcher at KB Securities, said, "Although eco-friendly industries have surged recently, we believe there is still room for growth. As the world transitions to eco-friendly energy, investments and production in existing fossil fuels will decrease, causing energy prices to surge in a phenomenon called 'greenflation.' Through this process, interest in decarbonization will further increase."

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