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Kospi punches through 2,400 level during day

June 30,2017
Korea’s main bourse surpassed the landmark 2,400 level on Thursday and closed at 2,395.66. [YONHAP]
The benchmark Kospi passed another milestone on Thursday, topping the 2,400 threshold in intraday trading for the first time in its history.

It hit an all-time high of 2,402.8 at around 10 a.m. as institutional and foreign investors scooped up tech and finance stocks. The index retreated to close at 2,395.66, which was up 0.55 percent from the previous day and the third record close in four days.

The new intraday record came only 50 days after the Kospi smashed the 2,300 mark in May.

Market bellwethers Samsung Electronics and SK Hynix and banking and securities shares drove the bullishness, backed by expectations of sound earnings in the second quarter.

“The earnings forecasts [for major companies] keep going up,” said An Young-jin, an analyst at SK Securities.

“Along with the great outlook, foreign investors provide liquidity to the stock market. Also, expectation for the new administration played a part, though not as significant as compared to the earnings forecasts.”

Major finance stocks from the top 200 Kospi index rose 2.08 percent or 17.73 points on Thursday, according to the Korea Exchange, while the comparable tech index rose 0.69 percent or 15.07 points.

Banking stocks such as KB Financial Group, Woori Bank and Hana Financial Group hit new highs for the past 52 weeks.

Major economic indicators including exports, gross domestic product growth and consumer sentiment have been showing signs of improvement, prompting major economic institutions to raise the country’s growth outlook.

But some analysts have turned cautious, warning that adjustments are inevitable in the third quarter.

“It will be difficult for the index to continue its strong upward momentum,” said Lee Kyung-min, an analyst at Daishin Securities.

“The market capitalization to nominal gross domestic product ratio has exceeded one [meaning the market is overvalued]. Also, with falling oil prices, [certain] economic indicators and exports also could take turns for the worse. Sales performances of companies on the Kospi after the second quarter may go down.”

Analysts predict that market headwinds will develop in the second half of the year.

The uncertainties include the fall-out from Europe and the United States’ phasing out economic stimulus measures and low oil prices as well as the government’s new regulations for the real estate market.

Korea’s companies are bracing for headwinds.

The business survey index (BSI) of manufacturing companies showed that companies’ expectations for July were worse than they were for June, going from 84 to 80, according to the Bank of Korea on Thursday.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]