KOSPI Challenging Historic Highs... 'Bottom Fishing' to Determine Profit and Loss

[Asia Economy Reporter Lee Seon-ae] The KOSPI index is challenging a historic high, and investment advice suggests that how investors respond afterward will ultimately determine their profit or loss.

According to the Korea Exchange, the KOSPI index closed at 3,198.62 on the 16th, up 4.29 points (0.13%) from the previous trading day. The index started at the 3,194 level, surged past 3,200 during the session, then reversed to decline to around 3,185, showing significant volatility. It reached a high of 3,206, approaching the previous peak of 3,208 set on January 25, but fell below 3,200 in the afternoon to close the session.

KB Securities forecasted that the KOSPI index will head toward a historic high. KB Securities researcher Lee Eun-taek stated, "The sharp rise in the surprise index does not mean the market is overheated, but rather that experts' forecasts are incorrect. In other words, it is not a divergence between the real economy and the stock market, but a divergence between experts and reality." He added, "From this perspective, although the surprise intensity may weaken somewhat, corporate earnings in the second quarter are also expected to be a surprise. Conversely, an economic and employment recovery exceeding expectations will inevitably accelerate the Federal Reserve's tightening."

He continued, "Although market interest rates fell despite strong economic indicators, this is related to supply and demand (Japanese funds/short covering) or risk appetite, and it is difficult to interpret this as an expectation of a delay in the Fed's tightening schedule," emphasizing, "Ultimately, the KOSPI will challenge a historic high."

However, he believes that focus should return to tightening from the end of the second quarter. The researcher said, "Whoever can catch this low well will decide this year's profits."