Liquidity feeds into stock bubble
By Yoon Ja-young Stock markets here are expected to extend a liquidity-driven rally for a while, but some analysts caution that recent steep gains are backed by no improvement in the real economy.With the benchmark KOSPI and the tech-loaded KOSDAQ continuing their bull run, retail investors are increasingly returning to the market.The KOSPI closed up 3.60 points, or 0.17 percent, at 2,143.50 Friday, while the KOSDAQ closed up 8.59 points, or 1.23 percent, at an 87-month high of 706.90.The KOSPI is forecast to beat its record high of 2,228 points set in May 2011.Foreign investment banks are now forecasting between 2,200 and 2,300 points. Morgan Stanley expects the main index could reach as high as 2,700 this year if corporate earnings rise 21 percent.John Kim, an analyst at IBK Investment and Securities, said that foreign funds had been flowing into the Seoul bourse after Europe’s own version of quantitative easing.Foreigners bought nearly 3 trillion won in shares in March. “The quantitative easing by the European Central Bank will continue until September 2016. With
