The KOSPI index, which has been rallying day after day, is just a few steps away from reaching 5,000 points. In the securities industry, some analysts say that because the stock market "likes milestone numbers," the KOSPI 5,000 will inevitably be achieved. A milestone number refers to a "base with symbolic significance that decisively makes something distinctly distinguishable."
Kang Hyun-gi of DB Securities said, "When the stock market posts record gains, the stock index ends up looking to a milestone number," adding, "It is rare for a rally to stop short when only a few steps remain before a milestone number is reached."
Korea's stock market history of rising has proven this. As the recovery phase after the IMF crisis overlapped with the IT boom, the domestic stock market soared explosively from late 1998 to 1999. The KOSPI index, which was at 280 points in June 1998, surpassed 500, 600, and 700, and in July 1999, the following year, reached 1,000 points.
A similar situation occurred in the mid-2000s. As the domestic credit card bond bubble burst in the mid-2000s, the KOSPI index fell to 515 points in Mar. 2003. It then gained upward momentum as the U.S. housing market boom coincided with emerging-market capital investment, and reached 1,500, 1,600, and 1,700. This raised talk that the milestone number of 2,000 could be achieved, and it eventually materialized.
A similar case played out during the "coronavirus pandemic" in 2020. The KOSPI index fell to 1,457 in Mar. 2020. Countries embarked on unlimited money printing to save their pandemic-stricken economies. With the "Donghak Ant Movement" supporting the market, the KOSPI index hit the milestone number of 3,000 just 10 months after the pandemic began.
Why does the stock market like milestone numbers? Kang suggested, "Because the entity that moves the stock market is humans." The explanation is that in periods when a favorable mood pervades the stock market, the symbolic meaning of milestone numbers can be reflected in prices as the mass of individual investors go along.
The KOSPI index is now a few steps shy of 5,000. On the 21st, the KOSPI index closed at 4,909.93. Kang said, "There is room for the stock market's propensity to move toward milestone numbers to appear."
Then which sectors are worth watching? From an investment strategy perspective, some advise paying attention to securities stocks. Kang added, "When the KOSPI index reaches a milestone number, expectations swell, and securities stocks can outperform other sectors for a certain period," adding, "Even looking at past cases, securities stocks showed relative strength after the KOSPI index reached a milestone number."