Securities Industry's KOSPI Outlook for Second Half: 2200-3000 Range Suggested
DB Investment Securities Optimistic, Samsung Securities Conservative... Variables Include Next Year's Economic Outlook and Interest Rate Cuts
In the first quarter, KOSPI-listed companies recorded sluggish earnings, and as the Korean stock market shows a stagnant trend within a trading range, the outlook for the market in the second half of the year is also divided. Pessimists believe the 'Boxpi (KOSPI + box range)' trend will continue, while optimists expect the index to reach as high as 3,000 points.
According to the Korea Exchange, on the 22nd, the KOSPI closed at 2,557.08, up 0.76% from the previous trading day, and the KOSDAQ ended at 852.04, up 1.23%. The KOSPI hit an intraday high of 2,582.23 on the 18th of last month but fell below the 2,500 level temporarily due to a stock price crash triggered by Soci?t? G?n?rale (SG) Securities, before stabilizing. The KOSDAQ also rose to an intraday high of 913.97 on the 19th of last month but dropped to a low of 806.47 on the 15th of this month amid deteriorating investor sentiment toward secondary battery stocks by foreign investors.
Meanwhile, the securities industry has presented mixed forecasts for the stock market trend in the second half of the year. The most optimistic forecast came from DB Investment & Securities, which predicted the KOSPI could rise to as high as 3,000 points. Hyunki Kang, a researcher at DB Investment & Securities, said, “The possibility of the U.S. Federal Reserve (Fed) lowering its benchmark interest rate contains the potential to lead the economy upward,” adding, “The widening gap between short- and long-term interest rates could trigger a financial market rally, and improved purchasing power may drive an earnings-driven market, so the stock market in the second half of this year is expected to experience an unexpectedly strong rally.”
The most conservative forecast was made by Samsung Securities. Samsung Securities projected the KOSPI band for the second half of the year to be between 2,200 and 2,600 points. Considering that the KOSPI closed at 2,557.08 on the 22nd, this implies an upside potential of only 1.67%. Yonggu Kim, a researcher at Samsung Securities, said, “Our stock market rose significantly in the first and second quarters this year on expectations of Fed rate cuts, but these expectations will fade in the second half, leading to a retracement of gains.” He added, “Even assuming the worst-case scenarios such as a rapid U.S. economic recession or a global financial crisis, the potential maximum downside is likely limited to within 10%, so we consider the 2,200 level on the KOSPI as a medium- to long-term bottom, factoring in domestic and international uncertainties.”
Most other securities firms forecast a relatively moderate bullish market. The second-half KOSPI bands were projected as follows: Daishin Securities 2,380?2,780, Korea Investment & Securities 2,400?2,800, Hana Securities 2,300?2,700, IBK Investment & Securities 2,350?2,800, and Meritz Securities 2,500?2,900. Junho Byun, a researcher at IBK Investment & Securities, said, “Analysis since 1980 shows that the KOSPI’s second-half volatility is closely related to the change in next year’s economic growth rate compared to this year.” He diagnosed, “This year, KOSPI operating profits are likely to suffer a severe decline of about -20% year-on-year due to the semiconductor downturn, but there is a high possibility of improvement next year due to the base effect.” He added, “Considering current consensus estimates, the expected KOSPI growth rate in the second half is about 20%.”
The securities industry identified stocks with excessive declines and growth potential as the leading candidates to drive the domestic stock market in the second half. Representative sectors include semiconductors, bio, and entertainment stocks. Yonggu Kim of Samsung Securities said, “Promising sectors for the second half include semiconductors, shipbuilding, bio, and media (entertainment), and we recommend mid- to large-cap growth stocks such as Samsung Electronics, Samsung Electro-Mechanics, NAVER, and JYP Ent.” He added, “Especially below the KOSPI 2,400 level, it is effective to treat this as an opportunity to re-enter the market and reorganize portfolios, favoring holding over panic selling and strategic buying over passive observation.” Junho Byun of IBK Investment & Securities forecasted, “Growth stocks will lead the rally in the second half, with a focus on valuation rerating of growth stocks in semiconductors, bio, and internet sectors following the end of monetary tightening.”
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