A photo of a Buddhist monk visiting a securities firm counter has been drawing attention on online communities recently. The fact that even a monk, who trains to reach the state of nonpossession, is investing suggests the stock market's heat is intense. In the market, some are calling this a "human indicator signaling a market top."
The previous day, the KOSPI, buoyed by an inflow of retail investment funds, crossed the 4,200 level for the first time ever. Both Samsung Electronics, the KOSPI bellwether, and SK hynix broke through the 110,000 won and 600,000 won ranges, respectively, extending their all-time-high rallies. As buying pressure intensified, SK hynix was even designated as an investment caution issue.
With the KOSPI up more than 75% from the start of the year, "market-top" debate is resurfacing. The KOSPI's 12-month forward price-to-book ratio (PBR) has already surpassed the 2021 peak (1.23 times). PBR is a gauge of whether the index is overvalued, and some note that valuations have entered overheated territory in the short term.
Lee Kyung-min, a researcher at Daishin Securities Co., said, "This month, the KOSPI may enter a phase of easing short-term overheating and absorbing supply," adding, "Levels above 4,100 on the KOSPI are likely an overshooting (over shooting·a temporary surge). Be wary of short-term volatility and focus on risk management."
In dollar terms as well, the KOSPI is near its historical peak (the 1,400 level). This means foreign investors, who have led the recent KOSPI rise, cannot help but feel price pressure. In fact, the KOSPI foreign ownership ratio, which was in the 32% range in early September, surged to the 34% range on Oct. early and has since seen its climb slow.
Although short-term overheating signals are appearing, retail investors seem to be focusing on positive factors that will continue into next year. A U.S. Federal Reserve rate cut, government stock market support measures, and profit growth for corporations stemming from the global artificial intelligence (AI) and semiconductor supercycle are boosting expectations for achieving "Ocheonpi (KOSPI 5000)."
Some also analyze that even if the index rise halts, a stock-picking market centered on individual shares will form. Byun Jun-ho, a researcher at IBK Securities, said, "Starting from the year-end, a stock-picking market, including the KOSDAQ, will take shape," adding, "In particular, semiconductor, materials·parts·equipment, bio, and secondary battery names are expected to be the starting point."