KOSPI to breach 2,000 mark soon

By Kim Da-ye

Korean stocks are expected to breach the much-anticipated 2,000 mark this year, but won’t settle there, analysts here said Friday.

“The stock prices can go up some 10 plus points within a day, so it is likely to break the mark just one time. But that is unlikely to continue,” said Kim Byung-yeon of Woori Investment & Securities.

The Korea Composite Stock Price Index (KOSPI) closed at 1,988.96 Thursday, climbing up 33.24 points or 1.70 percent from a day earlier. On Friday, the index shot to 1,991.96 during the early trading hours, but settled at 1,986.14 ― just 2.82 or 0.14 percent down from Thursday.

Analysts said the breach of the 2,000 mark would be temporary due to risks both at home and abroad.

The main concern of the stock market is that China could tighten its monetary policy over the weekend as the country’s leaders will meet Friday to determine the direction of its economic policy. China’s key priority is controlling inflation as the country’s consumer price index grew by 4.4 percent, the highest figure in the last 25 months. In October, the country raised the key rate by 0.25 percent after freezing it for 22 months.

Asian stock markets, in general, fell Friday as they were concerned such a policy could negatively affect China’s consumption, leading to a slower global economic recovery.

Analysts also commented that the stock market is getting over the risks from North Korea and European countries deep in debt, but now faces a sluggish U.S. economy whose unemployment rate remains worse than the market’s expectations.

The analysts also felt that the stocks climbed up by an overly large margin on Thursday, and the KOSPI may go through a correction period.

“I personally hope it [the KOSPI] doesn’t breach the mark. The stock market went up Thursday because it was the expiry date of the futures and option contracts,” Woori’s Kim said. “Except the fact that it is a year-end stock market, there isn’t much to expect.”

Hyundai Securities analyst Bae Sung-young was a little more optimistic, saying that the stocks of brokerages have risen, indicating that the market expects further ascension.

“One favorable factor can boost the stocks above the 2,000 mark,” said Bae who added that the cheap Korean won and undervalued domestic companies is encouraging foreign investors keep buying Korean stocks.

Bae, however, still remain cautious on the prospect of the KOSPI settling above the 2,000 mark. “When you talk about the stocks settling above a certain mark, the figure should be above it by four to five percent ― which means about 2,100 points.”