Will the Korea Composite Stock Price Index ever rise past 2,050 points? The KOSPI has plummeted repeatedly after reaching just that level over the past two years, making it a psychological Maginot line.
The main index reached 2,049 points in April last year but then sank due to impact of the eurozone fiscal crisis. In January to February this year, it reached 2,030 points only to plummet due to the effects of the weak Japanese yen and North Korean threats.
But over the last month foreign investors have snapped up more than W11 trillion (US$1=W1,065) worth of Korean stocks, raising hopes that the KOSPI could finally break the barrier.
The Chosun Ilbo asked 13 major brokerages about their forecasts.
Asked whether the KOSPI would surpass 2,050 points by the end of this year, 12 out of the 13 brokerages said it is possible, the other said no.
But views were mixed about when the magic level will be breached. Five brokerages said later this month and another five in November. Two brokerages said December.
Only KDB Daewoo Securities forecast a short-term correction in stock prices between October and November as China pursues restructuring, while currency risks continue to weigh on investor sentiment.
Six brokerages based their rosy outlook on the U.S. and eurozone entering recovery phases, while China's economy remains robust. Five projected the stalemate over the U.S. debt ceiling to be resolved soon, while four forecast Korean businesses will see improving earnings.
Three brokerages said Korea's current account surplus will improve the government's fiscal health.
But brokerages were also wary of temporary drops in share prices due to external risks.
Four including Hyundai Securities and Shinhan Investment projected the KOSPI will drop to 1,900 points over the short term, and all said there is a chance that the KOSPI could drop below 1,950 points.
IM Investment & Securities said domestic stock prices are "very high" compared to corporate profits and economic conditions and even forecast the KOSPI will drop to 1,850 points in the short term.