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2021 Outlooks

J.P. Morgan lifts 2021 Kospi target to 3,200

By Dec 09, 2020 (Gmt+09:00)

J.P. Morgan lifts 2021 Kospi target to 3,200

Global investment firm J.P. Morgan projects South Korea’s benchmark Kospi will climb to 3,200 next year, up nearly 18% from the current 2,723.30. This is the first foreign firm to issue a strong outlook for next year, alongside domestic brokerage firms that have already set their Kospi targets above 3,000.

The higher forecast is on anticipation that companies will come back strong once the COVID-19 crisis eases and that local real estate regulations will drive money back into the stock market, according to the firm's Dec. 8 report.

The investment firm also predicts the total operating profit and net profit of listed companies in Korea to rise by 56% and 53% next year, respectively.

“Although our absolute estimates for next year’s operating profit and net profit are slightly lower than 2018 levels, which peaked mainly due to memory-centric earnings, next year all sectors will show a balanced growth trend,” the firm explained.

J.P. Morgan also expects Korea’s semiconductor giants Samsung Electronics Co. and SK Hynix Inc. to each account for 25% of the MSCI Korea Index, with the two companies addressing issues that had lowered their evaluations, such as improving corporate governance structure through enhanced shareholder return policies and focusing on environmental, social and governance (ESG) issues.

Equities will remain the preferred investment method as Korean government’s strict housing market restrictions further money flow into the stock market.

Also, a robust line-up of initial public offerings in growth sectors will drive the market, according to J.P. Morgan.

Other growth drivers include access to COVID-19 vaccines, increased global presence of Korean content and structural growth in e-commerce across all business activities.

According to the report, an unprecedented level of retail participation supported the overall market despite considerable foreign money outflow until October.

Going forward, there will be "increased aggregate price-to-earnings valuations due to healthcare and battery companies that have expanded their portions in Korea’s large cap portfolio,” the report concluded.

Write to Ji-yeon Sul at

Danbee Lee edited this article.

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