By Park Hyong-ki
Staff Reporter
The benchmark KOSPI and tech-heavy Kosdaq markets lost some 110 trillion won in market capitalization during the first six months of the year.
The downfall is attributable to credit woes stemming from subprime mortgage defaults in the United States, the Korea Exchange said Tuesday.
However, soaring prices of oil added downward pressure on Seoul stocks, with the KOSPI losing 11.2 percent, and the Kosdaq 15.6 percent since January, driven by foreign net-selling.
Analysts say there are no positive factors in sight this month to boost stock prices, already undermined by worsening sentiment.
SK Securities analyst Choi Seong-lak said, ``There is nothing we can count on to give the stock markets an immediate rebound this month. The macro-environment is not so good.''
The general consensus shows that corporations will not post sound earnings in the second quarter as initially expected.
For example, Samsung Electronics, the biggest listed company by market capitalization, will not be able to reach the market consensus of 2.5 trillion won in operating profit said Goodmorning Shinhan Securities, adding that 2 trillion won was more likely.
Its analysts say the weakening of the Korean won is not enough to offset slow global demand on rising inflation. ``Inflation is the biggest risk factor, which will further slow down global demand for Korean products,'' said Lee Sun-yup of Goodmorning Shinhan.
He projects the KOSPI to hit as low as 1,650 in July, but warned of other negative factors to come in the near term.
``We have to watch out for a possible rate-raise by the European Central Bank. Also, the hurricane season is coming in the U.S., which is likely to further raise oil prices,'' said Lee.
Echoing Lee's words, Choi said although oil prices are likely to stabilize in the long-term, he believes, ``No way will it happen this month.''
Choi expects the main bourse to fluctuate between 1,660 and 1,800 in July, saying that he has kept ``neutral'' on stocks.
Oh Hyun-suk, an equity strategist at Samsung Securities, also agrees that the KOSPI will follow global stock markets ``and continue to undergo corrections.''