S. Korean stock market set for further rise after KOSPI lands in uncharted 3,000-point territory

By Chung Joo-won

SEOUL, Jan. 6 (Yonhap) -- South Korea's benchmark stock index topped the historic 3,000-point milestone Wednesday on hopes of an economic rebound from the coronavirus pandemic, with major brokerages betting for a further rise down the road.

The main Korea Composite Stock Price Index (KOSPI) stood at 2,994.63 points as of 9:59 a.m., up 0.14 percent from the previous session's close, after rising as high as 3,027.16 points after the opening bell.

The KOSPI mounted the 3,000-point plateau, after landing in the 2,000-point range in 2007, ushering a fresh chapter in the country's 38-year-old benchmark index.

Officially launched on Jan. 4, 1983, the KOSPI, the country's benchmark index, thrived in the mid-80s, skyrocketing more than 670 percent on the back of low market rates, low oil prices and weak U.S. dollar. The index surpassed the 1,000-point mark for the first time in March 31, 1989.

The KOSPI saw its worst crash on June 16, 1998, when the country was battered by the unprecedented financial crisis. The index dipped to as low as 280 points at one point.

At the turn of the millennium, the KOSPI rebounded on the back of the country's economic recovery and a steep growth of the Chinese economy. The popularity of investment funds also helped the index continue its upward march. On July 25, 2007, the KOSPI exceeded the 2,000-point mark for the first time.

But heavy dependence on foreign stock holding kept the KOSPI vulnerable to external shocks, such as global financial crises. The U.S. mortgage crisis dragged down the KOSPI to as low as 938.75 points on Oct. 24, 2008. It was not until Dec. 14, 2010, that the KOSPI recovered to the 2,000-point threshold.

After stabilizing in the 1,800-2,200-point range for several years, the KOSPI broke the 2,500-point mark on Oct. 30, 2017, thanks to brisk chip exports.

The KOSPI remained lackluster in the following two years amid the U.S.-led protectionism and the U.S.-China trade tussle. But a tougher challenge occurred last year, marked by the first confirmed virus case here on Jan. 20, 2020.

The year 2020, however, turned out to be phenomenal for many financial market observers. The KOSPI dipped to as low as 1,457.64 points on March 19 amid concerns over the COVID-19 pandemic but rebounded and closed the year at 2,873.47 points, with a stellar 31 percent on-year gain.

The index's gain last year was the highest advance among the G-20 member countries' key stock indices.

Such a dramatic rebound would not have been possible had it not been for retail investors, according to the financial experts.

In the period from March 1 to Dec. 30, individual investors bought a net 38.1 trillion won (US$35.1 billion) worth of local stocks on the main bourse, while foreigners dumped a net 21.5 trillion won and institutions offloaded a net 8.2 trillion won.

Analysts said individuals helped accelerate the reevaluation of South Korean stocks, which have been undervalued in the eyes of foreigners for many years compared with their Asian peers.

Market optimism remained high with the turn of the year, thanks to hopes of an economic rebound and ample liquidity.

Major brokerages predicted the KOSPI's further gains this year, raising their target forecast to peak as high as 3,300 points in 2021.

Shinhan Investment Corp. raised its 2021 KOSPI outlook to the 2,500-3,300 point range, up from the 2,100-2,700 point band set in late October, citing signs of an economic rebound and the KOSPI's revaluation on a global scale.

"The KOSPI's valuation may seem high compared with the past (years), but its value is still discounted to merely 66 percent of its global peers," said Shinhan Investment researcher Kang Song-cheol.

Samsung Securities suggested a band of 2,700-3,300 points in 2021, a far cry from its previous 2,100-2,850-point forecast.

The revision is largely based on "increasing signs of a corporate earnings rebound at home and aggressive fiscal policies globally," Samsung Securities analyst Kim Yong-goo said.

jwc@yna.co.kr
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