Domestic Companies' Operating Profit and Net Profit to Increase by 56% and 53% Next Year
[Asia Economy Reporter Minji Lee] The global investment bank (IB) JP Morgan has forecasted that the KOSPI could rise to the 3200 level next year. The rise is attributed to the government's strong real estate regulation policies and the policy benefits of the incoming Joe Biden administration.
According to the financial investment industry on the 9th, JP Morgan recently presented a target of 3200 for the KOSPI index next year through its Asia-Pacific regional market report. JP Morgan stated, "This reflects the visible recovery in corporate earnings and optimism about the COVID-19 vaccine," adding, "Operating profits of companies are expected to recover by more than 50% compared to the 2019 fiscal year."
JP Morgan expects a balanced recovery across various industries, forecasting that Korean companies' operating profits and net profits will increase by 56% and 53%, respectively, compared to the previous year. Although these figures are lower than those of the 2018 fiscal year two years ago, the bank anticipates an improvement in the 'Korea discount' phenomenon due to strengthened shareholder return policies and expanded ESG (Environmental, Social, and Governance) initiatives.
JP Morgan believes that the government's housing price control policies and strong housing market regulations could create a bullish stock market. Other reasons cited include △ IPOs of major companies in growth industries △ benefits from the U.S. Biden administration's policies △ vaccine procurement policies covering 60% of Korea's total population △ popularity of content such as K-pop △ growth of the e-commerce market.
Preferred sectors include semiconductors, electric vehicles, and 5G. Companies named include Samsung Electronics, SK Hynix, Samsung Electro-Mechanics, Hyundai Motor, LG Chem, Kakao, Lotte Chemical, Samsung Fire & Marine Insurance, Hana Financial Group, and CJ.
Meanwhile, other investment banks are also forecasting a strong Asian stock market next year and have positive outlooks on Korea. Earlier, Credit Suisse expected Asia to enter an 'earnings super cycle' next year and named Korea as the top preferred country with an expected 43% growth in earnings per share (EPS) next year. Goldman Sachs predicted that exports will increase with President Biden's election, projecting a real GDP growth rate of 3.6% and forecasting the KOSPI to break its record high by reaching the 2800 level.
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