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Kospi likely to rebound to 2,200-level amid key economic policies

Korean New Deal drive to boost local IT stocks

(Yonhap)
(Yonhap)

Facing a series of key economic events slated for this week, South Korean stocks are set to rebound slightly with investors weighing hopes against the coronavirus woes, according to market watchers Sunday.

At the core is the “New Deal” package scheduled to be unveiled Tuesday -- seeking to create jobs and foster economic growth amid the COVID-19 fallout, President Moon Jae-in’s administration put forward a program to invest more than 100 trillion won ($83.29 billion) into “Digital New Deal” and “Green New Deal” -- the two policy pillars of the package.

Market watchers forecast that software and information technology-related stocks will benefit due to the mid- to long-term projects. Industries such as digital infrastructure, 5G, telemedicine and new renewable energy systems will continue to gain popularity, according to Han Dae-hoon, an analyst at SK Securities.

“Following the concrete plan of the Green New Deal, we will be able to foresee which sectors and stocks may stand to benefit,” said Noh Dong-kil, an analyst at NH Investment & Securities. “Software-related stocks, meanwhile, are certain to multiply amid the Digital New Deal.”

There is, however, the possibility that persisting uncertainties may dampen the local index at some point, Noh added, citing the upcoming meeting of 27 European Union member state leaders to discuss a fiscal recovery package worth 750 billion euros.

“There’s a possibility that the EU summit will turn out to be somewhat negative, like confirming the different stances among countries. Then optimism could be disappointing, which would further result in a decline in the global stock market,” Noh said.

The nation’s main bourse Kospi is expected to move between the range of 2,130-2,200-points, according to the analyst. He said the index was likely to follow the global stock markets and major economic events.

Meanwhile, Kospi closed at 2,150.25 points on Friday, down 2.16 points or 0.1 percent from a week ago. Due to market bellwether Samsung Electronics’ surprise earnings guidance for the second quarter, Kospi started off with a 1.65 percent rise on July 6, but it erased the earlier gains through the week amid the daily hike in virus infections globally.

By Jie Ye-eun (yeeun@heraldcorp.com)
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