South Korea’s benchmark stock index will probably gain 14 percent to a record by 2014 as the improving global economy lifts earnings at exporters, said Samsung Asset Management Co.
Investors should favor technology and communication companies, automakers and retailers, Nam Dong Joon, chief investment officer at South Korea’s biggest private money manager by assets, said by phone from Seoul. The Kospi may climb to 2,300 next year, surpassing the 2,228.96 peak reached in May 2011, Nam said. The gauge rose 1.1 percent to 2,023.84 at 1:22 p.m. in Seoul.
The Kospi rallied 14 percent from this year’s low on June 25 as data showed the economy expanded 1.1 percent in the three months through June and exports jumped at a quicker-than-estimated 7.7 percent rate in August. Overseas investors plowed a net $7.1 billion into South Korean shares last month, the most on record, according to exchange data compiled by Bloomberg.
“Economies in developed markets, led by the U.S., are recovering, which will boost demand for South Korean exporters,” Nam said. His firm manages about 126 trillion won ($118 billion) in assets.
The U.S. economy expanded at a 2.5 percent annualized rate in the second quarter from the previous three months, accelerating from 1.1 percent growth in the first quarter. Europe’s economy emerged from its longest-ever recession in the second quarter.
Samsung Electronics Co., Asia’s biggest technology company, and Hyundai Motor Co., the automaker that got more than half its sales from overseas in 2012, account for about 24 percent of the Kospi by weighting.
Accumulated net income for the 763 companies on the Kospi will climb as much as 15 percent to 115 trillion won ($107 billion) in 2014, Nam said.
The Kospi index has advanced 1.3 percent this year, lagging behind the 13 percent rally by the MSCI All-Country World Index. The Korean gauge is valued at 1.1 times net assets, a 46 percent discount to the MSCI global measure.