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(News Focus) Seoul's main bourse expected to maintain growth throughout 2017

2017/10/30 17:39

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By Kang Yoon-seung

SEOUL, Oct. 30 (Yonhap) -- South Korea's main bourse set a new record Monday with its index closing above the 2,500-level mark for the first time since the market opened in 1983, with analysts expecting shares to maintain growth for the remainder of 2017.

On Monday, the benchmark Korea Composite Stock Price Index (KOSPI) climbed 5.3 points, or 0.21 percent, to 2,501.93. Analysts said the increase was helped by solid gains on Wall Street last week, led mostly by technology companies.

"South Korean shares, led by major IT firms, posted growth following gains of U.S. technology companies," said Lee Young-gon from Hana Financial Investment Co., saying there may be more room for growth although some investors may seek to lock in their gains as the KOSPI moves up to break previous records.

"The U.S. Nasdaq composite index's gain led by tech firms such as Amazon.com also helped the South Korean market. Such a trend will continue down the road, helping the stock market easily settle above the 2,500 mark in November," said Park Hee-jung, a researcher at Kiwoom Securities Co.

Cho Yong-joon, a researcher from Hana Financial Investment Co., echoed the view, saying the KOSPI may even hit the 2,600-mark within this year considering growth is based on the performances of such robust companies as Samsung Electronics Co. and SK hynix Inc.

Earlier this month, Samsung Electronics said its third-quarter operating profit is expected to have nearly tripled on-year, apparently on sound returns from its computer chip business. The company will release a finalized report on Tuesday.

SK hynix also said its third-quarter net profit reached an all-time high level of 3.05 trillion won, reflecting a bright outlook over South Korean technology firms.

Hanwha Investment & Securities Co. said South Korean shares are currently under-evaluated in light of their performances and growth potential. The brokerage forecast the KOSPI would reach as high as 2,580 before the end of the year.

The signs of improvement between Seoul and Beijing's diplomacy also cast a brighter outlook on local shares, they added. China is the No. 1 trade partner for South Korea.

"There are signs of lifting sanctions against South Korea by China, including the renewal of a bilateral currency swap arrangement, the meeting of defense ministers from the two countries, and the lifting of restrictions on tour packages to South Korea," said Park Sang-hyun from HI Investment & Securities Co.

The market watcher, however, cautioned that South Korea should still remain alert as China's stance on the two countries' diplomacy is still uncertain.

Seoul and Beijing relations have been strained after South Korea deployed a U.S. missile defense system aimed at North Korea in the country, which China claims to be a threat to its military strategy.

The tension had an adverse impact on South Korean listed firms which depend on the Chinese market, including the country's top carmaker Hyundai Motor Co.

"The KOSPI surpassed the 2,500 mark despite North Korean risks, the U.S. Federal Reserve's reduction of the balance sheet, the potential revision of the Seoul-Washington free trade pact, and the tension with China over the Terminal High-Altitude Area Defense (THAAD)," an official from the Korea Exchange, the main bourse operator said.

"The growth is based on the increased exports based on the improved global economy. It reflects the positive assessment on the local market's fundamental conditions," the official added.

The official said the main bourse is anticipated to continue growth on the rising hope over the restructuring of listed firms' governing structure, coupled with efforts to provide more returns to shareholders.

The bourse operator, meanwhile, said that the KOSPI took little over a decade to move up 500 points to break the 2,500 mark after share price hit 2,000 for the first time ever in July 25, 2007.

An electronic signboard at a Seoul-based bank shows the benchmark Korea Composite Stock Price Index (KOSPI) closing at 2,501.93 on Oct. 30, 2017. (Yonhap) An electronic signboard at a Seoul-based bank shows the benchmark Korea Composite Stock Price Index (KOSPI) closing at 2,501.93 on Oct. 30, 2017. (Yonhap)

colin@yna.co.kr

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