Crystal Balls Are Cloudy on Market Moves

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Crystal Balls Are Cloudy on Market Moves


Analysts Sunday expressed generally conservative and unclear views on the Seoul stock market outlook for March. Most brokerage companies expected that the Korea Composite Stock Price Index and the Kosdaq composite index will not deviate much from the average levels of February.

A number of major brokerage firms said they expected that the Kospi will move between 550 and 650 points in March, and that the Kosdaq composite index will range from 70 points to 90 points.

While few analysts forecast that the Kospi would decline to below the 550-point level in March, Dongwon Securities and SK Securities said they thought the index could rise as high as to 670 points. Hanwha Securities and LG Investment & Securities estimated March's maximum level at 660 points.

Most major brokerage firms reckoned a prospective interest rate cut by the U.S. Federal Reserve at its March 20 meeting or earlier as one of the favorable factors for Seoul markets this month.

But some brokerages, including Daishin Securities, were somewhat skeptical about the anticipated U.S. interest rate cut. "The U.S. Fed's two interest rate cuts this year have not boosted the Nasdaq market much, increasing concerns about a possible hard landing of the U.S. economy," an analyst at Daishin Securities said. The brokerage firm expected the Kospi will come in no higher than 600 points in March.

A number of analysts said they believe the government's recent decision to increase pension funds' investment in stocks would help the stock markets move upward. As another favorable factor, Daishin, Hanwha and SK pointed out that Korea's national credit rating could be upgraded in March. Tong Yang and Dongwon expected that reenergized restructuring in the financial sector would help Seoul markets rise.

Most of the major brokerage firms said they think instability on Wall Street is the chief bearish factor for the local stock markets.

The companies said that U.S. high-tech firms' deteriorating earnings and the share price tumbles on the Nasdaq market would affect Seoul stocks, especially local technology stocks.

Some brokerage companies pointed out that foreign investors' movements correlated with changes in the Nasdaq market. "The correlation of Seoul stocks and Wall Street has recently been reduced, but it is likely to increase again," one analyst said.

Samsung and SK cited the downward movements of memory chip prices in the global market as one bearish factor in the stock markets.

Brokerage firms' "buy" recommendations to customers had little in common, demonstrating the lack of consensus on March's movements.

Cheil Industries on the Korea Stock Exchange was recommended by two brokerage companies, Good Morning and Samsung, because the textile and chemical company has performed well recently, especially in its manufacturing of chemicals used to make information technology equipment.

In the Kosdaq market, three brokerage firms, Daewoo, Hyundai and LG, proposed that investors pay attention to Future Systems, since the network security company will benefit from the government's increase in its information technology budget and from recent increases in demand for Internet security.



by Chung Sun-gu / Moon So-young

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