Abundant Liquidity Fuels Rally
KOSPI topped 2,200 points in about five months with record liquidity propping up the stock market and expectations rising for a COVID-19 vaccine. On July 15, KOSPI rose 0.84 percent to close at 2,201.88. The closing point exceeded 2,200 for the first time since Feb. 19 this year.
The previous day, news outlets reported that antibody formation was successful in Moderna’s recent clinical trial. After the news, KOSPI reached 2,216.97 during the following trading session.
According to securities companies, the abundant market liquidity is another factor of the recent rally. The Bank of Korea announced on July 15 that the volume of broad money increased 35.3 trillion won in May to show the largest monthly increase since records began in 2001.
Those companies are pointing out that the two factors are expected to lead to a rally of large-cap value stocks, which have risen to a relatively smaller extent. As they pointed out, Hyundai Motor Company, LG Electronics, Kia Motors and Woori Financial Group gained 7.39 percent, 5.79 percent, 3.53 percent and 3.41 percent on July 15, respectively. Samsung Electronics posted a positive earnings surprise for the second quarter of this year and the same is expected to apply to multiple other companies, which is another basis of the optimism.