Kospi performing second best among G20 at historic highs may reach 3,000: analysts

Korean main stock index Kospi renewing historic highs as the second best performer in G20 category this year is expected to keep up the bull run into the new year and hit as high as 3,000, given the fervid appetite from foreign to retail investors.

According to 2021 outlook reports by 13 domestic securities companies, the Kospi is ranged from 2,600 to 3,000, sustaining the Kospi¡¯s hitherto best-ever closing of 2,617.76 as of Tuesday. The Kospi kept up a record-breaking streak for the second session this week.

Song Jae-kyeong, research head of Heungkuk Securities Co., gives a buoyant target of 3,000 based on growth prospects of Kospi members led by large-cap chipmakers and automakers, projecting a 38 percent gain in earnings next year.

He forecast the Korean economy would expand 3.5 percent or even more next year on the back of the recovery in the global economy.

According to the earnings outlook of 182 companies with estimates from a minimum of three brokerage houses compiled by FnGuide, they are projected to record a combined 35.1 trillion won ($31.6 billion) in operating incomes in the fourth quarter, up 61 percent from last year. Combined revenue was estimated to reach 470.6 trillion won, up 0.9 percent on year.

Firearms are well packed to fuel a further rise in the Kospi.

The balance at brokerage accounts reached an all-time high of 65 trillion won on Nov. 18. Retail money in the stock market is expected to grow even larger as expectations for returns in real estate investment are weakening, said Lee Chang-mok, NH Investment & Scurrilities research center director.

[Photo by Lee Chung-woo]

The Kospi closed Tuesday at a new historic high of 2,617.76, adding 0.58 percent from the previous day when it broke the 2,600-mark for the first time since January 2018. Foreigners net purchased 1.7 trillion won just over the first two days this week. They kept up net buying throughout the month except for Nov. 4.

The Kospi gained 6.2 percent so far this year as of Friday, the second-best performer among those in G20 economies.

Still, it has more room to go up. MSCI¡¯s 12-month-forward price-to-earnings for the Kospi stood at 17.1 as of last Friday, according to Bloomberg. It is much smaller compared to its peers – the U.S. with 25.7, European Union with 22.6, Japan with 22.7 and China with 17.9.

The Kospi¡¯s price-to-book ratio also stands relatively low at 1.1, compared with U.S (3.9), EU (1.8), Japan (1.3) and China (2.0).

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]