SEOUL, Jan. 11 (UPI) — Regardless of ongoing COVID-19 stressors and weeks of state-mandated social distancing, South Korea’s consultant inventory market index has risen about 10 p.c this yr.
After topping 3,000 factors on Wednesday, the third buying and selling day of 2021, the KOSPI continues to rise, surpassing 3,100 factors on Friday and three,200 factors early Monday.
The benchmark index has been on the rise for no less than the final 10 weeks in a row, for the reason that first week of November.
Plentiful liquidity, a shopping for binge of particular person buyers and the projected financial restoration are touted as the foremost causes behind the unusually bullish run.
Meritz Asset Administration CEO John Lee mentioned, “The KOSPI index ought to finally attain 10,000.”
As a former Wall Road fund supervisor, Lee is a well-known evangelist of inventory market investments in South Korea.
Lim Byung-hyo, an analyst at Korea Funding & Securities, mentioned buyers do not need to unload their shares straight away.
“Through the first quarter of this yr, we count on that buyers would like dangerous property,” he mentioned. “The worldwide financial system is about to enter the expansionary part after going by means of the restoration part.”
However some warn of bubbles within the inventory market because the price-index ratio of the whole inventory market approaches 15. The ratio sometimes has fluctuated within the neighborhood of 10.
Professor Kim Younger-ik of Sogang College mentioned the nation’s general inventory values are overrated by round 30 to 40 p.c. Securities analyst Lee Kyung-min agreed.
“The share costs have surged too quick. It’s the time for the market to take a relaxation,” he mentioned.
In opposition to this backdrop, Hwang Sei-woon, a researcher on the Korea Capital Market Institute, mentioned South Korea ought to elevate a ban on short-selling instantly.
“The home inventory values have gained too quick, producing considerations about bubbles. We’re required to permit short-selling proper now,” Hwang mentioned.
Final March, the nation’s regulators imposed a ban on short-selling of shares listed on KOSPI and smaller exchanges amid the inventory market panic as a result of COVID-19 pandemic. Halfway by means of final yr, the nation prolonged the ban for six extra months, by means of March 2021.