Sangsangin Securities "KOSPI Outlook Lowered to 2550~2750"

Concerns Over Consumer and Economic Slowdown... Impact on Global IT Companies
Possibility of Prolonged Ukraine-Russia War
China's City Lockdowns... Doubts About Effectiveness of Economic Stimulus Measures

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] Sangsangin Securities has lowered its KOSPI index forecast from the previous 2600~2800 to '2550~2750'.

Kim Jang-yeol, a researcher at Sangsangin Securities, stated, "The slowdown in consumption and the economy due to macro concerns is highly likely to ultimately have a negative impact on global top IT companies. The rising tensions at the Ukraine-Russia border and the effects of China's 'Zero COVID' policy will put downward pressure on the index."

Researcher Kim analyzed that the possibility of economic contraction and consumption slowdown is emerging amid the Federal Reserve's (Fed) interest rate hikes and quantitative tightening (QT). He explained, "The downside pressure on the IT-centered stock market is expected to continue once more. The slowdown in major demand sectors (excluding data center servers) such as PCs and consumers, as well as the potential delay in memory price rebounds, have already surfaced."

The Ukraine-Russia war is also negative for stock prices. According to foreign media reports, Russia has occupied Mariupol and is planning a military parade on May 9. Since May 9 is the day Russia commemorates its victory over Nazi Germany in World War II, there is analysis that Russia might declare an end (or ceasefire) to the war on this date.

[Image source=Yonhap News]

Researcher Kim pointed out, "Even if the war ends, it has laid the groundwork for a new Cold War era," adding, "The resulting global political and economic repercussions could last at least several years to over a decade."

He continued, "The speculation about the war ending on May 9 might be wishful thinking by the stock market," and argued, "The war could prolong, and investors will have to bear the costs themselves."

[Image source=Yonhap News]

He also expressed the view that China's economic stimulus measures need to be closely watched. Researcher Kim said, "Although China set its 2022 economic growth target at 5.5%, the possibility of a decline to 4~5% is increasing," and evaluated, "It is questionable whether the Chinese government's continued monetary policy responses, such as further cuts to the reserve requirement ratio, will be sustainable measures."

While lowering the KOSPI index forecast, Researcher Kim expects the outperformance potential of 'reopening stocks' to continue.

He advised, "A social distancing adjustment plan has been announced that completely lifts restrictions on private gathering sizes and business hours," adding, "Related sector stocks may have already priced in expectations, so investors should carefully examine the potential for individual stock gains when investing."

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