KB Securities, KOSPI Expected Range 2550~2870 This Month

On the 26th, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. On that day, the KOSPI index opened at 2929.75, up 9.36 points (0.34%) from the previous session. The won-dollar exchange rate started at 1196.9 won, down 1.7 won. Photo by Moon Honam munonam@

[Asia Economy Reporter Hwang Junho] KB Securities expects the market bottoming process to continue until spring and suggests a "weight increase" strategy for this month's stock market, betting on China's stimulus measures and reopening.

Recently, the stock market has faced significant difficulties due to economic slowdown, the U.S. Federal Reserve's tightening, and the impact of LG Energy Solution's new listing. Another negative factor is the long-term interest rate. If the market judges that the economy will weaken due to the Fed's recent actions, long-term interest rates are expected to fall, leading to an inversion of the long- and short-term interest rates. The aftershocks of the new listing are also expected to continue. Following LG Energy Solution's listing, the KOSPI's P/E ratio 10x level has significantly dropped from the previous 2760 to 2620.

However, KB Securities considers the current situation, where the P/E ratio has fallen below 10x during this "double bottom" formation process, as an opportunity. Among sectors, attention should be paid to reopening-related industries. They also focus on industries that have not been able to raise prices over the past two years, expecting that both P (price) and Q (quantity) can increase after reopening. Representative sectors include energy, apparel, airlines, and home appliances.

There is also an expectation for the easing of Omicron in the U.S. this month. This is anticipated to improve supply bottlenecks in the future and thus alleviate inflation concerns (expected around April).

It is also important to note that the earnings outlook for Korean companies, which had declined until the end of last year, has started to rise since the beginning of this year. IT manufacturing, transportation, and finance are leading this trend. Sectors with downward outlook changes are mainly consumer stocks (hotel leisure, retail, media, cosmetics).

Based on these forecasts, KB Securities has set the expected KOSPI range for this month at approximately 2550 to 2870. Researcher Eun Taek Lee of KB Securities analyzed, "At the beginning of this month, when the market is finding its bottom, it may be advantageous to follow the trend and focus on 'stocks with good earnings and inflation-related sectors (IT, energy, transportation),' but in the mid- to long-term, inflation easing and reopening from the consumption side (hotel leisure, media, automobiles, essential consumer goods) should also be considered."