By Na Jeong-ju
Will the benchmark Korea Composite Stock Price Index (KOSPI) hit 3,000 under the Park Geun-hye administration?
Hopes are high that the KOSPI will reach the mark for the first time in history if the Korean economy successfully weathers a storm of external factors, such as the European debt crisis and the U.S. fiscal policy, under Park’s presidency.
Samsung Securities forecast in a report that the KOSPI will rise to 3,550 in 2017 on the back of strong export growth and the globalization of Korean firms.
On the first day of her inauguration, however, the KOSPI closed at 2,009.52, down 9.37 points or 0.46 percent from the previous close. The Korean won also lost ground against the dollar, ending at 1,086.70 won, down 2.7 won from a day before.
The rosy prospect is based on the analysis that major Korean firms are largely undervalued despite their growing presence in global markets.
On Wednesday, Statistics Korea will release a report on the country’s industrial output for January, which will provide a glimpse of how Korea is weathering the debt crisis in Europe and the looming global currency war.
Last year, output in the mining and manufacturing sectors jumped 1.7 percent year-on-year thanks to a recovery in the electronics parts, medicine and chemical industries. However, their exports slid 1.3 percent to $548.1 billion amid the recession in Europe.
Production in the sectors increased for the fourth consecutive month in December, raising hopes of an economic recovery, according to Statistics Korea.
On the same day, the Bank of Korea will unveil a monthly report on the country’s current account.
Korea posted a current account surplus for the 11th straight month in December as exports gained ground, weathering the global slowdown, and the won’s gain against major currencies.
The surplus hit a record high last year at $43.3 billion, up $17.2 billion, or 65.9 percent from a year earlier, boosted by robust exports and improvements in the services sector.
The Ministry of Strategy and Finance, the central bank and the Financial Services Commission will also make public a joint review on Korea’s macroeconomic condition, which will include an analysis on household debt and the real estate market. This is the first time for them to reveal such a report.
The study is drawing keen attention amid expectations that the Park Geun-hye administration will take measures to address the sluggish property market and the growth of household debt in a bid to boost private consumption.
President Lee Myung-bak presented a goal of lifting the KOSPI to 5,000 five years ago, but the dream was shattered by the global financial crisis. During his presidency, the benchmark index gained only 18.6 percent from 1,686.45 to 2,018.89.