KOSPI resists external shocks better than Nasdaq, S&P

KOSPI resists external shocks better than Nasdaq, S&P – The Korea Times

KOSPI resists external shocks better than Nasdaq, S&P

By Lee Min-hyung

The benchmark KOSPI suffered fewer shocks than major equity indices in New York, Hong Kong and Shanghai as earnings fundamentals for listed Korean companies are expected to remain strong through the second half of this year, analysts said. Monday.

According to data from the Korea Financial Investment Association, Korea’s main stock exchange fell 11.41% as of May 27 from the end of 2021. But the decline was not as steep as those of the aforementioned foreign indices.

The Nasdaq extended a larger loss of 22.45% over the same period on fears of a gradual tightening of monetary policy in the world’s largest economy. The S&P 500 has also fallen 12.75% over the past five months due to these currency factors and growing external uncertainties sparked by Russia’s invasion of Ukraine.

Asian economic powerhouses also had to take a heavier beating than Korean stocks. The Shanghai Stock Exchange Composite Index fell 13.5%, while Hong Kong’s Hang Seng Index fell 11.54% over the same period.

Market analysts said Korean equities suffered less as Korean corporate earnings performance remains strong.

“For now, KOSPI is significantly undervalued in terms of fundamentals as well as earnings prospects for listed companies,” said Lee Kyoung-min, an analyst at Daishin Securities.

The expert predicts that the main stock market will soon regain momentum for a relief rally as the fearful sentiment in local stock markets has almost peaked.

“The KOPSI is expected to hit the 2,700 mark after possibly posting a technical rally soon, and it is likely that the index could rebound to above 2,800 points with a stronger relief rally,” the analyst said. .

Even if we assume that big business earnings growth is limited and an economic recovery falls short of expectations, the major exchange still has room for growth of around 10% in the second half of this year, according to Lee.

“As once-growing fears of a possible leap forward in (US Federal Reserve) rate hikes of 0.75% have subsided and the global economy is unlikely to fall into the trap of recession over the next few months, stock indices of major global financial markets will be on a relief rally.”

The soaring exchange rate between the won and the dollar is another key reason that has recently triggered a massive exodus of foreign investors. Starting this year, the exchange rate has seen a sharp rise, reaching a level slightly below the worrying level of 1,300 won to the dollar in early May.

However, the figure has recently shown signs of stabilizing, falling to around 1,240 won on Monday, reducing the likelihood of a mass exodus of investors from the local stock market in the near term.

Huh Jae-hwan, an analyst at Eugene Investment & Securities, however, remained pessimistic about the stabilization of the exchange rate from a medium-term perspective.

“It is very exceptional that the dollar won exchange rate broke above the 1,250 mark,” he said. “Even though the rate won’t rise at an alarming rate until the third quarter of this year, it is expected to reach a range of 1,310 to 1,320 won by the end of this year.”

Shirlene J. Manley