By Samir Al Khoury
South Korea’s Kospi index recorded 2,683 points two days ago, its highest level since May 31, 2022, but returned and fell yesterday, recording 2,657 points. This index rose by approximately 10% since the bottom it recorded on January 18 of this year (2,429 points) until the close in yesterday’s session (2,657).
Most Korean economic indicators exceeded analysts’ expectations, such as exports, unemployment rate, and consumer confidence.
Markets are awaiting the issuance of the interest rate decision by the Central Bank of Korea next Thursday, amid expectations that it will keep interest rates unchanged at the level of 3.50%.
It seems that there’s a need for greater transparency in government measures concerning corporate governance, especially for listed companies. Simultaneously, there’s an emphasis on publicly condemning those who violate these requirements. This has positively influenced Korean stocks, evident in the significant influx of foreign investment into these stocks.
It’s notable that Korean regulatory authorities have implemented a comprehensive ban on short selling operations from October 6, 2023, until June 2024. This measure aims to curb the illicit utilization of this trading mechanism by hedge funds and investors globally.
From a technical standpoint, the picture appears encouraging for the Korean Kospi index, and we saw a golden cross between the 50-day moving average in blue at 2556 points and the 200-day moving average in yellow at 2533 points, which indicates upward momentum for the Kospi index.
Regarding the Relative Strength Index (RSI), it registered around 64 points, surpassing the 50-point threshold. This suggests a positive momentum for the index.
The Positive Directional Movement Index (DMI+) records approximately 36 points, compared to the Negative Directional Movement Index (DMI-), which records approximately 16 points. We note that the gap between these two indicators is large, which means that purchasing pressures on Korean stocks are strong. More importantly, the ADX trend strength index records about 30 points, which is more than 25 points, which means that the momentum of this upward trend is strong.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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