(LEAD) Korean stock market set for another leap after rebounding in 2019

(ATTN: ADDS stock market forecast for 2020 at bottom)
By Chung Joo-won

SEOUL, Dec. 30 (Yonhap) -- South Korea's benchmark stock index advanced more than 7 percent this year, buoyed by rising optimism for the Sino-American trade negotiations and a much-coveted economic recovery, the bourse operator said on Monday.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 2,197.67 in the final trading session of the year on Monday, up 7.67 percent, or 156.63 points, from last year's final closing at 2041.04, according to the Korea Exchange (KRX).

The total market capitalization in 2019 also rose 9.8 percent on-year to 1,476 trillion won (US$1.28 trillion), mostly aided by advances in market heavyweights, KRX said.

Samsung Electronics' market cap increased 102 trillion won, taking up about 77.3 percent of the total increase.

The average daily turnover dropped 23.8 percent, and trading volume surged 18.3 percent, which means there was lower volatility on the market this year.

Foreign investors, who were net sellers in 2018, turned to a net buying mode in 2019. They net bought 1 trillion won worth of local shares this year. Their stock holdings accounted for 38.4 percent of the market capitalization on the main bourse this year, up from the previous year's 35.8 percent, KRX said.

Institutions were also net buyers with a net purchase of 8.8 trillion won, while retail investors unloaded a net 11.8 trillion won in 2019.

The KOSPI fared better in 2019, starting off the first trading session at 2,010.00 points.

The index hit the year's high of 2,252.05 on April 17. Improved economic data, released by the United States and China, drove foreign investors to scoop up shares for 13 straight sessions.

The index hit the year's low of 1891.81 on Aug. 6, a day after the U.S. Treasury Department labeled China as a currency manipulator, on top of its earlier announcement of a 10 percent tariff on Chinese imports. China slashed back, saying it would halt purchases of American agricultural products.

The tech-laden secondary KOSDAQ finished the year lower with a 0.9 percent, or 5.82-point, decline to end at 669.83.

The KOSDAQ market's total market cap rose 5.7 percent this year to 241.4 trillion won, while the daily trading volume went up 3.7 percent and daily turnover shed 12.8 percent, according to KRX.

In 2018, the KOSPI plunged 17.28 percent from a year earlier, suffering the sharpest fall since 2008. The trade war uncertainties between the U.S. and China, as well as slowing domestic demand, weighed heavily on the export-intensive economy that year.

Hit by the high-profile trade tussle, the South Korean economy is estimated to grow 2 percent in 2019, the smallest figure since 2009.

To bolster the struggling economy, the Bank of Korea (BOK) slashed the policy rate twice from 1.75 percent to 1.50 percent in July and to 1.25 percent in October, matching the all-time low that was previously seen in 2016.

The BOK said the country's economy is estimated to expand 2.3 percent in 2020.

Sino-American trade will remain the largest driver of the KOSPI down the road, local brokerages said.

Lee Kyoung-min, an analyst at Daishin Securities Co., said the index will likely start off slow and pick up pace in the second half, with the yearly band to move in the 1,900-2,480 range.

"The Americans are seemingly less inclined to slap additional tariffs (on Chinese goods)," he said, adding that the initial U.S.-China trade agreement remains "a valid card to win the presidential election," set for November next year.

Lee Won, an analyst at Bookook Securities, estimated the index would hover in the 1,900-2,400 range.

Lee said improved corporate performances will pull up the KOSPI despite looming trade uncertainties.

He added that the country's chipmaking industry, the key export driver, will post moderate recovery in the April-June period.

jwc@yna.co.kr
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