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Global Investment Bank (IB) Goldman Sachs presented the KOSPI forecast at 3700 at the end of this year. It is 500 points higher than the previous forecast of 3200. The main reason is that Korean companies’ earnings improvement will be clear given the global economic recovery this year. The resumption of short selling is also expected to have little effect on the uptrend of the stock price.
In a report on the 23rd (Hong Kong local time), Timothy Mo Goldman Sachs Asia Pacific stock strategist said, “We reaffirm our existing position that we should overweight Korea’s business cycle stocks and fourth industrial revolution-related stocks.” “I adjust the index target (upward).”
Goldman Sachs raised its earnings forecast for Korean companies this year to 59%, which is 5 percentage points higher than the market forecast (54%). Goldman Sachs said, “We have raised the KOSPI’s earnings per share (EPS) growth rate to reflect expectations for global economic growth,” and said, “Economic-sensitive stocks such as semiconductors, consumer free goods and materials will benefit. The increased proportion of companies related to the 4th industry, such as rechargeable batteries, was also cited as a factor raising EPS.
The fact that KOSPI’s share price-earnings ratio (PER) has reached a historic high can be justified when considering the low interest rate. Goldman Sachs explained, “The transition to a digital economy also justifies the high valuation.” Meanwhile, KOSPI’s target PER has been raised from 12.5x to 13.1x.
Resumption of short selling is expected to have little market impact. When looking at the resumption of short selling in 2009 and 2011, the main reason is that it showed a brief weakness in the beginning, but it was on the rise. Goldman Sachs also commented on the recent inflation concerns, “if the fundamentals are supported, the market is still strong,” and said, “The Korean market showed a higher profile than other markets when the expected inflation rose from a low level.” In the meantime, it was analyzed that chemicals, technology, hardware, semiconductors, and financial stocks showed high returns.
Reporter Yoon Sang Ko [email protected]
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