Stock Mart Prospect for 2000; Technical Rebound Both for KOSPI, KOSDAQ Expected
Although most of the stock markets around the world started with an upward hike last week with high expectations for the new millennium, new possibilities of another increase in Fed rates after the worries over Y2K problems had been put off, led to a downward adjustment in the U.S. stock market, and subsequently a downswing in all the world markets.
As for the domestic market, the KOSPI plunged to the 940s after arbitrating of information and communication shares by foreign investors and further selling by institutional investors, while the clear divergence among share prices was somewhat alleviated due to rebound attempts from shares of financial institutions and minority shares.
Likewise, the KOSDAQ market further backed off to the level of 220s spearheaded mainly by Internet and communication shares such as Daum Communications, Serome Technology, Locus, Handysoft, Korea Telecom Freetel, and Haansoft, which had let the market upswing during last year.
As for this week, there is a possibility of a technical rebound led by information and communication shares which suffered a huge short-term downfall. Yet market stability has to be preceded by stable market demand and supply such as the stability of the US stock market, conversion to net buying by foreign investors, and mitigat on of further selling by domestic institutional investors.
Moreover, the stability of the benchmark three-year corporate bond yields, which rose to double digits despite the Bank of Korea's pledge to keep the current level of short-term interest rates, is yet another prerequisite for the stability of the stock market. …