▲ On the afternoon of the 30th, the closing day of the stock market in 2020, employees are working in the dealing room at Hana Bank’s headquarters in Jung-gu, Seoul. On this day, the KOSPI index closed at 2,873.47, up 52.96 points (1.88%) from the previous trading day, and the KOSDAQ index closed at 968.42, up 11.01 points (1.15%) from the previous trading day. (yunhap news)
Stock markets around the world in 2020 were literally roller coasters. The economy froze due to the new coronavirus infection (Corona 19), and major countries implemented easing monetary policies, zero interest rates, and the largest quantitative quantification ever.
In the second half of the year, big tech companies rebounded with improved performance and overflowing liquidity. Donghak Ant was the main character who raised the KOSPI, which had plunged to the 1400 line, to the 2800 line. We summarize the outlook for the new year of 2021 to continue the bull market as the economic recovery market is expected.
It is predicted that in 2021, the global stock market will continue its high pace with enormous liquidity supply. Experts have observed that 2021 will be a bit slower than 2020, but the US stock market will continue to rise.
Goldman Sachs and JPMorgan have raised their forecasts for 2021, saying that anticipation for the COVID-19 vaccine and Joe Biden’s election will lead to a worldwide share price rally. Goldman Sachs expects the S&P 500 to reach 4300 in 2021. Earlier, JPMorgan predicted that the S&P 500 would exceed the 4000 line by early 2021 and then rise to about 4500 by the end of 2021.
Still, it was raised that it would be difficult for 2021 to look like this year. “It is reasonable to expect the global stock market to rise from mid to late single digits,” said Patrick Shortitz, global multi-asset strategist of JPMorgan Asset Management, in a recent contribution to the Hong Kong South China Morning Post (SCMP). “If you accept it and take into account the potential for some virus-related problems, this kind of coming out process will not be smooth.”
Some point out that the US stock market is full of bubbles at the level in 2000 when the dot-com bubble burst began. “The market is clearly bubbling in its mouth,” said Charlie McCeligot, a market analyst at Nomura Securities’ New York office.
Nevertheless, most experts believe that the possibility of the stock market returning to a downtrend right now is not high. The Federal Reserve (Fed) maintains a’zero interest rate’ over the next several years, and continues to easing monetary policy to provide massive liquidity to the market, such as buying large amounts of bonds. In addition, it is judged that economic stimulus measures and the spread of the Corona 19 vaccine will reduce the risk.
“All of this makes me nervous, but I haven’t found a reason to stop the bull market.”
Experts predict that the dollar will continue to weaken. The won-dollar exchange rate is on the decline, but the Korean foreign exchange authorities are also cautious about intervening in the modest drop in the exchange rate. It is said that holding the won alone will increase its value compared to the dollar.
The Dutch Labobank predicts that the US dollar will continue to weaken in 2021. Exchange strategist Jane Foley predicted that “the blockade following the mutant Corona 19 will reduce the rebound in economic activity, and this will cause the euro-dollar exchange rate to drop to $1.20 in the first quarter of next year.”
Kwon Amin, a researcher at NH Investment & Securities, said, “The decline in the US manufacturing stock rate and the prospect of improving corporate margins support the weakening direction of the dollar following the economic recovery.”
The weak dollar and anticipation of an economic recovery amid the spread of vaccines are a common boon for risky assets in emerging countries. Accordingly, from a short-term (three-month) perspective, a proposal is made to increase the share of investment in emerging markets compared to those of developed countries. It is an advice that the proportion of Korea and China should be increased from a long-term (1 year) perspective.
Lee Chang-min, a researcher at KB Securities, said, “The eurozone is also expected to struggle to keep up with the US-China competition. As global major economies recover, vaccines are spread, and lockdown concerns ease, the sentiment for investing in risky assets will be solid.” The case is not yet a big variable except for some emerging countries such as Argentina and Turkey.”
Major domestic securities companies have opened the top of the KOSPI target for next year to the early 3,000 line. Excluding Korea Investment & Securities, four major securities companies, including NH Investment & Securities, Samsung Securities, KB Securities, and Shinhan Investment & Securities, have recently raised their targets for next year to above the 3000 line.
Mirae Asset Daewoo did not present a forecast, but predicted that next year’s earnings per share (EPS) of domestic companies will rebound by 41% compared to this year, predicting that there is room for further upside.
KB Securities predicted that “the KOSPI will reach 3200 points next year as the economy and earnings are rapidly normalizing due to expectations for the Biden government and an increase in net profit (+52% expected).”
Foreign securities companies are also positive in the Korean stock market. JPMorgan said, “Next year, Korean corporate profits will increase significantly, and the shareholder-friendly policy will overcome the undervaluation of the Korean stock market,” said JPMorgan. “The government’s real estate regulation will cause market capital to flow into stocks and the KOSPI will reach 3200 points. “I said.
Samsung Electronics, the No. 1 market capitalization of the KOSPI, posted a stock price rally after three years, breaking the highest every day. It is predicted that 2021 will benefit from an increase in sales, which have been sideways for several years, as the semiconductor industry enters the’super cycle’.
In 2021, the DRAM (Dynamic Random Access Memory) semiconductor market is highly likely to enter the super cycle. The stock price analyzed due to the increase in the amount of cameras in smartphones and the clear growth prospect of the smartphone CIS (image sensor).
Shinhan Investment Research Center said, “We expect the supply contract for memory semiconductors to intensify significantly,” and “The big cycle of memory semiconductors is expected to reappear next year and next year due to low supply compared to the high demand for memory semiconductors.” I look forward to it.
For this reason, Samsung Electronics is expected to open the era of ‘90,000 electrons’ in 2021. Korea Investment & Securities raised the target price of Samsung Electronics from 81,000 won to 92,000 won.
Hyundai Motor Securities also raised its target price to 91,000 won, advising on buying and holding strategies rather than hasty gains. “There is a possibility of an external foundry (consignment production) due to Intel’s process technology problem, and there is a possibility that demand for new foundries will increase due to the design of Microsoft Amazon’s own CPU,” said No Geun-chang, head of the Hyundai Motor Securities Research Center. It is predicted that the possibility of an increase in foundry earnings such as excess demand for foundries is greater than ever.”
As the number of corona 19 confirmed increases, vaccine stocks are a rising stock. According to the Korea Exchange, the healthcare index, consisting of representative pharmaceutical and bio stocks in the KOSPI and KOSDAQ markets, recorded an increase of 90.79% in 2020.
The healthcare index has a high proportion of large bio stocks such as Samsung Biologics and Celltrion. Including small and mid-cap stocks that are not included in the index, the return is expected to exceed 100%. It is analyzed that the uptrend will continue through 2021.
Lee Hye-rin, a researcher at KTB Investment & Securities, said, “As the listed pharmaceutical and bio-listed companies continue to grow, we expect to make progress in both stock prices and earnings next year.” .
However, some were concerned about the resumption of short selling in March next year while raising expectations for the production of treatments beyond vaccines.
Oh Byung-yong, a researcher at Hanyang Securities, said, “The stock price may continue to rise until January, but it may be difficult from February ahead of the resumption of short selling in March,” said “There is a burden in terms of investment attractiveness and corona-related materials are decreasing as the high price is already going on.” “There is a time when a more conservative approach is needed than before.”
Short selling is an investment method in which a stock price is expected to go down, and a stock is sold by borrowing and then buying at a lower price to make a profit. In the case of Korea, short selling by institutions and foreigners is easier than individuals, so it has been criticized as a’sloping playground’.
An official from the National Assembly’s Political Affairs Committee said, “There are talks that the ban on short selling seems to be excessive. It is true that short selling will resume in March next year.”