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Kospi tops 2,700-point mark for the first time on foreign buying
Korean won expected to remain strong against greenbackBy Jie Ye-eun
Published : Dec. 4, 2020 - 18:02
As soon as trading began, the Kospi surpassed its previous record of 2,696.22 set a day earlier and soared to 2,705.34, up 9.12 points or 0.34 percent. Buoyed by foreign investors’ buying binge to the tune of 766.6 billion won ($707.85 million), the index continuously moved upward to reach 2,731.45 at the closing bell.
After briefly touching the 70,000 won mark a day earlier, market kingpin Samsung Electronics shares sustained their rally for the fourth consecutive session, advancing 2.58 percent to close at 71,500 won. SK hynix jumped 3.14 percent to 115,000 won at closing.
The tech-heavy Kosdaq began strong at 909.99, up 2.38 points or 0.26 percent from the previous session’s close. On a buying spree by retail investors for the fifth consecutive session, the index remained above the 900-point mark that it surpassed a day earlier for the first time in nearly 31 months, to close at 913.76.
The local currency against the US greenback surged, surpassing its record of 1,097 won per dollar set a day earlier. It began trading at 1,092.5 won per dollar but though its value rose sharply in the early dealing hours, it went below 1,090 won. Closer to the end of trading, it traded at 1,081.1 won per dollar, then closed the day at 1,082.1 won per dollar -- up 14.9 won, or 1.36 percent, from the previous session’s close.
Local analysts cited the recent surge in the value of the won to the greenback’s slump and the strong Chinese yuan, on top of a positive perspective toward increased outbound shipments of memory chips in November.
Amid the burden of the local currency’s strength against the US greenback, Deputy Prime Minister and Finance Minister Hong Nam-ki voiced concerns last month, warning that the authorities are ready to take action at any time to smooth out the local currency’s sharp gains.
While the currency experts forecast that the strong won tendency is likely to continue next year, it may reach as high as 1,040-1,060 won per dollar.
Samsung Futures analyst Jeon Seung-ji said the local currency is anticipated to move around 1,040-1,180 won per dollar next year. The won’s value against the dollar is likely to spike in the second quarter of next year on hopes of normalizing global economies, but is likely to fall steadily afterward, she added.
“The won-dollar currency is highly likely to reach near 1,060 won per dollar in the first half of next year. But since more local capital is expected to flow into overseas investments, the local currency against the greenback will trade around 1,100 won per dollar at the end of 2021,” said Kim Hyo-jin, an analyst at KB Securities.
Some experts, including Eugene Investment & Securities’ analyst Lee Sang-jae, suggested that on the other hand, the won is likely to gain value closer to the end of next year. He said the annual average won-dollar exchange rate will stand at 1,080 won per dollar and the value of the won will soar to 1,050 won per dollar at year-end on the back of the gap in economic fundamentals between the US and China.
“Some possible variables to the next year’s won-dollar currency are global investment preference over high-risk assets, capital inflow to emerging economies and the yuan currency reflecting Chinese government’s policy intention,” Lee added.
By Jie Ye-eun (email@example.com)
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