Despite lingering volatility, South Korea’s main bourse Kospi is expected to recover starting from the second half of this year if the novel coronavirus comes under control globally and that sense of stability boosts consumption demand on the back of policy efforts, research heads of brokerages in Seoul said Sunday.

“As pent-up demand sparks and corporate earnings increase with the government’s liquidity support, stock markets will gradually rise from the second half,” said Yun Hee-do, the head of the research center at Korea Investment & Securities, during a phone meeting held by the Korea Financial Investment Association to forecast the outlook of stock markets. “(But) It is inevitable for the local firms to face a huge profit decrease in the first half of this year amid the coronavirus.”

Lee Kyung-soo, research head at Meritz Securities said the global economy is already in a sharp recession, but noted that it wouldn’t last long. He highlighted that the speed of market recovery depends on how fast real businesses, in support of economic cure packages, normalize their operations.

Cho Yong-jun, research head at Hana Financial Investment, suggested that the local economy will grow 1.1 percent this year as the global economy starts the recovery process after the third quarter.

While Samsung Securities’ research head Oh Hyun-seok predicted the yearly band of the Kospi to move in the 1,400-2,000 range, Shinhan Financial Investment head researcher Yoon Chang-yong said the index’s movement will vary depending on the slowing spread of the COVID-19 virus in advanced countries such as the US and in Europe.

Main bourse Kospi plunged 20.16 percent during the January-March period. It was the highest falling rate since the 2008 global financial crisis with minus 22.35 percent.

The main bourse fluctuated between gains and losses, but ended higher for the second straight session Friday, to 1,860.7. Investors’ eyes are on whether it will continue a rebound from the COVID-19 plunge. The KOFIA hosted meeting was held to exchange views on market analysis with South Korea’s stock market exposing its volatility.

The market may seem to have hit a rock bottom, but the pandemic is not over yet, said Shin Dong-jun and Yoo Seung-chang, research heads at KB Securities, suggesting the possibility of a COVID-19 resurgence in winter and its impact on markets vulnerable to a second wave of attacks.

Mirae Asset Daewoo‘s research head Seo Cheol-soo also remained cautious, saying it is difficult to predict whether the indexes will go up or down for now.

“In the long-term aspect, stock indexes will go through a recovery from the current economic shock. The market trend will be directed depending on the condition of the virus and strength of the economy’s restoration,” he said.

NH Investment & Securities’ Lee Chang-mok forecast the global economy to recover in a liquidity-driven and low interest rate environment after the COVID-19 pandemic. But the speed of perking up may slow due to limited abilities of fiscal policies and demand in other nations than the US, he said.

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