Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
KOSPI regains vigor on US-China trade deal
A dealer passes by an electronic sign at KEB Hana Bank headquarters in Seoul on Friday when U.S. and China announced their de facto first phase deal. Yonhap
By Lee Min-hyung
By Lee Min-hyung
The South Korean stock market is expected to jump on a track for a rebound this week on a positive signal for an interim trade deal between the United States and China, analysts said Sunday.
Starting from November, the outlook for the benchmark KOSPI remained negative, with foreign investors engaging in a selling spree of large-cap stocks here amid lingering uncertainties over the trade spat between the world's two largest economies.
But with both sides de facto reaching the first phase deal Friday, expectations are that the agreement will clear away the external uncertainty on the KOSPI and help drive up its valuation, experts said. The official agreement is expected to be reached sometime early next year, according to the U.S. Trade Representative.
The focus over the deal was on whether the U.S. would impose new 15 percent tariffs on Chinese products worth $156 billion (180 trillion won) on Dec. 15. But for now, the plan has been put off, with both sides signing the “truce” agreement.
Experts said the agreement was in line with the market expectation, and this was not the worst-case scenario for the local stock market.
“Under the current circumstances, the KOSPI will be on track for a steady recovery,” Samsung Securities analyst Moon Dong-yeol said.
On top of that, foreigners' selling spree has already reached its peak in recent months, so they are unlikely to resume the move in the near future, according to the analyst.
He argued no other outstanding risk factors are detected to drive down the upward momentum of the KOSPI for the next few months.
“Until the first half of 2019, concerns were the global manufacturing industry would continue its sluggish growth. But for now, a favorable environment is being shaped for the Korean stock market, as the market condition of the semiconductor industry keeps improving,” he said.
Other analysts also concurred that KOSPI would continue its bullish run until the end of this year.
“With the 17-month-long fog surrounding the Washington-Beijing trade tension being cleared away, we expect KOSPI's Santa Clause rally particularly on industries, such as telecommunication, energy and semiconductors,” said Han Dae-hoon, an analyst from SK Securities.
Other experts also said outlooks remain rosy over the stable rebound of KOSPI next year.
“With the U.S.-China trade tension being alleviated, uncertainties over the Korean economy and the country's corporate earnings will fade away,” Daishin Securities analyst Lee Kyoung-min said.
“The KOSPI will reach as high as 2,480 points next year on the back of earnings momentum from major IT and hardware sectors.”