An digital buying and selling board at Hana Financial institution headquarters in central Seoul exhibits the benchmark KOSPI closing at 3,994.93 factors, Tuesday, up 1.9 % from the earlier session. Yonhap
The Korean inventory market is drawing consideration over whether or not it can journey a “Santa Claus” rally, a seasonal year-end rise in equities, with each upside and draw back elements weighing in the marketplace, analysts mentioned Tuesday.
As for upside growth, some analysts say the U.S. Federal Reserve’s extremely anticipated price reduce on Dec. 10 (native time) and positive factors in synthetic intelligence (AI) tech shares are anticipated to help the Seoul market by way of Christmas and into the primary week of subsequent yr.
Deliberate home coverage measures are additionally more likely to bolster market sentiment, together with a proposed decrease tax price on stock-derived dividend earnings, necessary share buybacks and a government-backed initiative to stimulate the secondary Kosdaq bourse.
Accordingly, optimists advised that the benchmark KOSPI could attain the 4,700-point stage, in comparison with its shut at 3,994.93 factors, Tuesday, up 1.9 % from a day earlier.
On the draw back, some consultants famous that these home measures could also be inadequate to drive a broad rally, whereas slower progress in inventory costs relative to rising earnings per share (EPS) of benchmark KOSPI-listed corporations might additionally restrict additional upside.
They advised that the KOSPI will finish the yr someplace between 4,100 factors and 4,200 factors.
“This yr has been one of many strongest bull markets on document, and as upward momentum tends to stay largely steady by way of the top of the yr, probability of a Santa Claus rally is excessive,” Byun Joon-ho, a researcher at IBK Funding & Securities, mentioned.
He pointed to the KOSPI’s 63.6 % acquire from January to November, marking the steepest tempo of enhance among the many principal indices of G20 nations.
Accordingly, the KOSPI, after lingering within the 2,000-point vary for years, surpassed the three,000-point milestone in June and the 4,000-point mark in October.
Hana Securities analyst Lee Jae-man mentioned the Fed’s anticipated rate of interest reduce of 25 foundation factors to three.75-4 % on Dec. 10 might “immediate buyers to hunt higher returns exterior the U.S. rate of interest market.”
“The Korean market may very well be a viable possibility, given its speedy enhance,” Lee mentioned.
Lee Eun-taek, head of analysis at KB Securities, famous that Google’s newest AI mannequin, Gemini 3.0 Professional, “has reaffirmed progress prospects for AI tech shares within the U.S., and this pattern is more likely to carry over into the year-end Korean market.”
The analyst went on to stipulate deliberate insurance policies that the federal government is pushing to implement in session with the ruling Democratic Social gathering of Korea.
These embrace setting the utmost tax price on returns from inventory dividends at 25 %, down from the initially proposed 35 %, starting in 2026.
The federal government additionally goals to encourage listed corporations to purchase again extra treasury shares as a part of a technique supposed to boost investor returns.
As well as, it’s contemplating rolling out tailor-made measures to spice up the Kosdaq, which grew 36 % from January to November, in contrast with 63.6 % progress within the KOSPI.
Most of the measures, nonetheless, fall in need of absolutely addressing retail buyers’ calls for, in line with Daishin Securities analyst Jung Hae-chang.
“As an example, many retail buyers imagine that the utmost tax price on inventory dividends needs to be set decrease than 25 %,” he mentioned. “This raises doubts in regards to the probability of a Santa Claus rally this yr.”
Roh Dong-gil, an analyst at Shinhan Securities, additionally remained skeptical.
He famous that though the EPS of KOSPI-listed corporations has surged 34.2 % in contrast with the start of the yr, the KOSPI’s price-to-earnings ratio has been trending decrease.
“This phenomenon happens when there’s inadequate confidence that earnings will enhance additional, usually resulting in a lackluster market,” he mentioned.
