January 08, 2021 09:36
The Korea Composite Stock Price Index closed above 3,000 points level for the first time ever on Thursday at 3,031.68 points, up yet another 2.14 percent and a new milestone in its 65-year history.
Its total market cap soared to a new record of W2.09 quadrillion (US$1=W1,091). It took 14 years for the main stock index to rise from 2,000 to 3,000 points.
Already on Wednesday the KOSPI surpassed 3,000 points during intra-day trading, powered by individual investors, but it closed a tad below as foreign and institutional investors took profits.
Amid concerns of overheating, Individual investors on Thursday cashed in more than W1.1 trillion worth of shares after flocking to the bourse in record numbers since last year. But institutional investors snapped up more than W1 trillion.
Lee Kyung-min at Daeshin Securities said, "The 'Blue Wave' in the U.S. [where Democrats take control of government] has raised prospects of expanded pump-priming measures, which led to booms in Asian stock markets. Expectations of strong earnings at semiconductor and rechargeable battery makers made stocks in manufacturing powerhouse Korea stand out."
The KOSPI grew the fastest among G20 bourses. According to the Korea Exchange, the KOSPI has surged 16.5 percent since Nov. 23, when it began its record-breaking bull run. That may be due in part to improved earnings of Korean businesses and strengthened market fundamentals, but some analysts caution that it may be nearing its peak.
The KOSPI soared due to continued strong buying by individual investors and hopes of improved corporate earnings and an economic recovery. Analysts project listed companies' net profits will improve in the first quarter of 2021 but caution against excessive investment in the stock market because the KOSPI has grown at a much faster clip than actual earnings and growth.
The fact that the KOSPI has doubled since a low of 1,457.64 points last March is a concern. Oh Hyun-seok at Samsung Electronics said, "The KOSPI still has room to grow further, but the rate of growth so far has been very fast, so we could see significant volatility. Individual investors could have a tough time making profits when stock prices fluctuate."
And Hwang Sei-woon at the Korea Capital Market Institute said, "The KOSPI could rise to 3,200 points in January, but there's not enough momentum for further growth and a short-term drop in February and March is likely."
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