[Wriggling Stock Market] ① "KOSPI Has Room to Rise 10% More"

Chief Investment Officers of Major Institutions Place Bold Investment Orders
Expectations for End of US Interest Rate Hike Cycle, Semiconductor Industry Recovery and Other Positive Factors
US Presidential Election, US-China Tensions and Other Variables... Gradual Breakout from Trading Range Expected

"You can boldly take the plunge."

Recently, the Chief Investment Officer (CIO) of A Gongjehoe urged employees to make bold investments. This directive came with the expectation that the sluggish stock market conditions and interest rate environment would improve. According to the financial investment industry on the 1st, the KOSPI rose about 3% from 2501.53 at the beginning of the month to 2577.12 on the 31st.

With the final resolution of the US debt ceiling hike negotiations, concerns over a US default, which had been weighing down global markets, have passed a major hurdle. This relief is positive for the stock market. The growing expectation that the interest rate hike cycle is coming to an end is also a factor that increases investment appeal. Although the conclusion of the hike cycle will be confirmed after the May employment data, the dominant analysis is that the major trend has already turned.

The easing of risks related to US regional banks and the growing optimism about the artificial intelligence (AI) industry are also favorable for the stock market. While the domestic stock market had been heavily concentrated on secondary batteries, the increasing expectations for a recovery in the semiconductor sector, which has a significant weight, are positively contributing to a turnaround in sentiment.

The CIO of B Gongjehoe said, "Stock valuations are low, and the global leading economic indicators are showing signs of a slight turning point," adding, "With the semiconductor outlook improving for the second half of the year, the situation looks good." He further stated, "I previously said that even if only a portion of funds from real estate flowed into stocks, the stock market could boom, but since the real estate outlook is quite negative, the assumption that the stock market could gain a windfall benefit is becoming a reality."

The CIO of C Pension explained, "Compared to a year ago, oil prices have dropped about 30% amid the precarious balancing act between inflation and recession, so now the concern is more about recession," adding, "Looking at the stock market, valuations are not that expensive, and although it is nerve-wracking, it is not bad." He continued, "Last year, the KOSPI fell by 25%, but it has risen about 15% now, and there is still room for about a 10% increase."

Forecasts for the KOSPI are also being revised upward. DB Financial Investment has projected the KOSPI's upper range at 3000 for the second half of the year, the highest among securities firms. KB Securities raised its KOSPI forecast for this year from 2800 to 2920. Kang Hyunki, a researcher at DB Financial Investment, said, "Both the macro environment of the Organization for Economic Cooperation and Development (OECD) major 20 countries (G20) leading economic indicators and corporate profitability support stock price increases," adding, "If consumption in major countries such as the US shows a favorable trend linked to improved purchasing power in the second half, resulting in an earnings-driven market, the stock market will continue its upward trend."

Global company CEOs also appear optimistic about this year's economic situation. According to the 2023 CEO Survey recently released by Deloitte Global and Fortune, global CEOs identified this year's business keywords as "hope for global economic recovery and expectations for new business opportunities for a leap forward." This marks a shift from last year's assessment of business as "overcoming delayed economic recovery and increased uncertainty through supply chain recovery and digital transformation," reflecting a more optimistic outlook and exploration of new opportunities.

Of course, some conservative views remain, cautioning that many negative factors still affect the stock market and that careful observation is necessary. In particular, the numerous major US events that act as key variables for the domestic stock market are a burden. In the second half of the year, several political events are pending in the US, including budget negotiations, candidate registrations for next year's presidential election, and visits by the US Congress to Taiwan. Additionally, geopolitical risks between the US and China and concerns over further interest rate hikes by the US Federal Reserve are also major variables for the stock market in the second half. In the May minutes of the Federal Open Market Committee (FOMC) regular meeting, many participants favored a "rate hold," but the option for additional rate hikes remains open. Experts emphasize the likelihood that the KOSPI will form a volatile market that gradually rises within a trading range rather than a sharp upward trend.

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