KOSPI 200 index regains momentum: How high can it go?

The KOSPI 200 index has joined its global peers in a strong rebound as investors assess the next actions by key central banks. The index jumped to a high of ₩337 on Wednesday after falling to ₩305 earlier this month. It remains about 21% above the lowest level in 2022.

South Korean stocks rebound

The KOSPI 200 index is a popular financial asset that tracks the biggest companies in South Korea like Samsung, LG Energy, SK Hynix, Samsung Biologics, and Hyundai. Other well-known companies in the index are LG Display, Asiana Airlines, and POSCO.

The KOSPI 200 index has bounced back in the past few days as investors focus on the South Korean economy and global monetary policy. Recent data showed that the economy was doing well as demand rises gradually.

The South Korean economy expanded by 0.6% in Q3, helped by consumer spending and export growth. In a report, the IMF predicted that the economy would have steady growth through 2028.

South Korean stocks also rose after signs emerged that China’s economy has bottomed. Industrial production and retail sales rebounded in October as the government implemented some rescue measures. This is important since South Korea does a lot of business in China.

The KOSPI index recovery is in sync with what other global stocks like the FTSE 100, Nasdaq 100, and S&P 500 indices. These indices have risen as investors react to the recent actions by key central banks.

In South Korea, the central bank has left rates unchanged in the past few meetings. It has remained quite hawkish, signaling that it could hike rates again since inflation remains significantly high. 

Other central banks like the Federal Reserve, European Central Bank (ECB), and Bank of England (BoE) have signaled that they will not hike rates again. Besides, inflation has dropped recently.

Most KOSPI 200 index companies were in the green. Cosmos, Lotte Tour, KCC, and Zinus were among the best-performing stocks in the index. 

KOSPI 200 index analysis

KOSPI chart by TradingView

The KOSPI index peaked at ₩351.10 in August. It then made a bearish breakout and settled to a low of ₩305.10 in November. It has now bounced back and moved above the 50-day and 100-day Exponential Moving Averages (EMA). 

The index has jumped above the important support level at ₩330, the highest point in January. It has also formed a small inverted head and shoulders pattern. Therefore, the outlook for the index is bullish, with the next point to watch being at ₩351.10, the highest point this year.