Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Will KOSPI index show 'January effect' this year?
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By Anna J. Park
Presidential election in March expected to have positive impact on stock market
By Anna J. Park
Investors are keenly monitoring whether local stock indices this month would show a “January effect,” a term that refers to a tendency of stock market gains early in the year. Usually, Korean stock indices move upward in the month of January, as retail investors who sold stocks at the end of the year due to taxation reenter the market.
Market experts say it's highly likely that the stock market in January will post a better performance. The research teams of securities firms suggest that the main benchmark KOSPI index could rise as high as 3,150 this week. Shinhan Financial Investment has been the most optimistic, saying that the index would move within a range of 2,900 and 3,150 early this month. KB Securities came up with a forecast range of 2,870 and 3,110 points for this week.
“A preference for risky assets will still be valid in the month of January, as a number of factors, ranging from an improvement in foreign investors' buying power with calming exchange rates, a favorable U.S. economy, as well as expectations on local companies' fourth quarter earnings, all ascribe to the market's inclination towards stock markets,” Han Ji-young, an analyst at Kiwoom Securities, said.
Another market analyst, Roh Dong-kil, an analyst at NH Investment & Securities, highlighted that overseas investors have turned to net-buying of stocks on the KOSPI since November of last year. He expected that net-buying worth 4 trillion to 10 trillion won ($3.3-8.4 billion) by foreign investors would further continue early this year.
The analyst also pointed out that the presidential election slated in early March is considered another major event that's expected to turn the market bullish, ahead of the big election. Actually, the presidential candidates of both of the main parties are scheduled to attend the opening ceremony of this year's stock market trading at 10 a.m. at the bourse operator, Korea Exchange (KRX) on Monday.
“Past records show that presidential elections have been favorable to the increase of local stock market indices,” Roh Dong-kil, an analyst at NH Investment & Securities, said. “KOSPI tended to show both absolute and relative increases from two months before the presidential election. The local stock market indices will be under the direct impacts of candidates' pledges from January, as the election pledges become more specific,” the analyst explained.
Regarding analysts' index forecasts on the entire year, each company's position varies, from the lowest of 2,610 to as high as 3,600 points. Daishin Securities showed the lowest range of between 2,610 and 3,330, while KB Securities' forecast reaches as high as 3,600 points on its highest end. Meritz Securities, NH Investment, Samsung Securities and Hana Financial Investment all suggested forecast ranges between some 2,800 and 3,400 points.