Summary
- Growing optimism over US-Iran ceasefire talks helped push the Kospi above 6,000, and the market's positive momentum may continue.
- Foreign investors led the index higher through heavy net buying in construction and nuclear-power stocks, including Daewoo Engineering & Construction, Doosan Enerbility and Taihan Cable & Solution.
- Brokerages said faster inflows from foreign investors and improving earnings could boost the appeal of large blue-chip stocks such as Samsung Electronics, SK Hynix and Hyundai Motor.
Forecast Trend Report by Period
Optimism over US-Iran ceasefire talks is raising expectations that the Kospi can extend its rally. Market strategists say the positive momentum may continue for now.
According to the Korea Exchange, the Kospi closed at 6,091.39 on July 15, up 2.07% from the previous session. That was its highest finish in 32 trading days since Feb. 27, when it ended at 6,244.13 before the war. After recently touching 6,000 during intraday trading, the index finished above that level at the close.
Foreign investors drove the advance with net purchases of 543.9 billion won. They focused on construction and nuclear-power shares seen benefiting from a possible end to the war. Their biggest net purchase was Daewoo Engineering & Construction at 210 billion won, followed by Doosan Enerbility at 201 billion won, Taihan Cable & Solution at 183 billion won and Samsung Electro-Mechanics at 59 billion won. Individual investors were the biggest buyers of SK Hynix, purchasing 514 billion won ahead of earnings due this month. They also bought Hyosung Heavy Industries, with net purchases of 101 billion won, Mirae Asset Securities at 66 billion won and HD Hyundai Heavy Industries at 56 billion won.
With ceasefire talks appearing closer, investor sentiment that had been damped by the conflict is recovering. The Korea Financial Investment Association said investor deposits stood at 117.6725 trillion won on July 14, the highest since June 24. Investor deposits are funds parked temporarily in brokerage accounts for stock purchases. Expectations that gains will continue as the first-quarter earnings season begins are also helping lift those balances.
US stocks hit fresh records on July 15. The S&P 500 rose 0.80% to close at 7,022.95, the first finish above 7,000. The tech-heavy Nasdaq Composite jumped 1.59% for an 11th straight daily gain. The Dow Jones Industrial Average fell 0.15%. The indexes not only erased losses triggered by the US-Iran war shock, but extended their upward momentum.
South Korean stocks may continue to see constructive sector rotation. Han Ji-young, an analyst at Kiwoom Securities, said semiconductor shares could pause after their recent strength. Even so, continued expectations for ceasefire talks and support from the Nasdaq's record high could keep risk appetite intact.
Brokerages are increasingly betting that foreign inflows into South Korean equities will accelerate. Forecasts that operating profit at major Kospi-listed companies could reach 1,000 trillion won next year, along with improved corporate governance from revisions to commercial law and a more stable won, are boosting the market's appeal from the second quarter.
Kim Dong-won, head of research at KB Securities, said stronger earnings in the Kospi market would act as a dual catalyst for the return of foreign investors and a shift in retail funds. He recommended focusing on large-cap blue chips tied to the index, including Samsung Electronics, SK Hynix and Hyundai Motor.
Cho A-ra, Hankyung.com reporter rrang123@hankyung.com
Korea Economic Daily
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