Heads of research at securities firms said the KOSPI could break through 5,000 points next year on profit growth led by the semiconductor sector. They noted, however, that tax reform needs to materialize, industrial competitiveness beyond semiconductors must be secured, and stock products such as exchange-traded funds (ETF) should be diversified to draw in investors.
On the 30th, the Korea Exchange (KRX) held a "market experts' roundtable for a leap to the KOSPI 5000 era" at its Yeouido headquarters. Twelve people attended, including Chairperson Jeong Eun-bo and other exchange executives; the heads of research from Mirae Asset Securities, Kiwoom Securities, iM, and LS Securities; the head of research from DB Financial Investment; and Kim Jin-uk, chief economist at Citibank Korea.
In his opening remarks, Chairperson Jeong Eun-bo said, "This week, our stock market set a new milestone in the history of the capital market as the KOSPI broke through 4,000 points," adding, "This is the result achieved together through efforts to enhance shareholder value, establish a fair market order, and the dedication of market participants."
Jeong added, "The exchange is making efforts to achieve the KOSPI 5000 era, and we will be reborn as a more trusted market with global competitiveness."
The heads of research and the economist who attended the roundtable offered cautious assessments of the exchange's analysis.
Park Hee-chan, head of research at Mirae Asset Securities, said, "Amid favorable liquidity conditions, earnings for some sectors centered on semiconductors have been revised upward, and consistent policies have repeatedly emerged to defend the market floor," but assessed that "separate from policy intent, there is a lack of measures that provide actual benefits."
Park noted that the combined top tax rate, including corporate tax and dividend income tax, is 58.8%, placing Korea's tax burden among the highest in the Organisation for Economic Co-operation and Development (OECD). "Market participants always emphasize tax benefits," Park said. "While addressing those areas, we should also strengthen shareholder returns as efficient measures."
Lee Byung-geon, head of research at DB Financial Investment, also said, "The policy measures presented when the new government was launched have yet to appear," adding, "The increase in profit forecasts for semiconductors next year has ultimately been reflected in current share prices, and to reach KOSPI 5000, the key will be profit expansion into sectors beyond Samsung Electronics and SK hynix."
As conditions for attracting foreign funds into the domestic stock market, views were offered on stabilizing the won-dollar exchange rate against the U.S. dollar and diversifying products such as ETFs.
Lee Jong-hyeong, head of research at Kiwoom Securities, said, "If we take the present as the peak, the (won-dollar) exchange rate needs to fall for foreign investors to come in expecting FX gains. The current exchange rate is not at an alarming level, but we should consider its impact on the market."
Lee also said, "In the United States, the ETF market developed and helped the stock market grow, and the domestic market can likewise expand only if significant funds flow into newly listed ETFs," adding, "I think increasing new themes as well as leveraged ETFs will help the stock market grow." This means it is important to draw new investors, not existing ones, into the market.
As for the KOSPI forecast for next year, it was presented in the 4,500 to 5,000-point range. Park Hee-chan said, "If we analyze around sectors that currently have competitiveness such as semiconductors, there is room for market capitalization to grow by more than 20%," adding, "With solid earnings figures reducing valuation burdens, achieving KOSPI 5000 is possible."
Choi Kwang-hyeok, head of research at LS Securities, also said, "I see nearly 30% upside potential for the KOSPI index centered on Samsung Electronics and SK hynix. Assuming the government does not change its policy stance through the local elections in Jun. next year, I see the KOSPI ceiling at around 4,500."
Regarding the heads' views, Chairperson Jeong Eun-bo said, "We are closely consulting with the National Assembly on the current tax reform, and by introducing new products into the market, we will work to draw interest from domestic and overseas investors in the domestic stock market."