Global investment banks posted positive outlook for South Korean stocks with some predicting the country’s benchmark Kospi to top 3,000 near the end of this year, a report showed.

According to the report by the Korea Center for International Finance on Sunday, five foreign investment banks - Nomura, Citigroup, Goldman Sachs, Bank of America Merill Lynch, and JP Morgan offered “overweight” investment rating on Korean stocks while two - Credit Suisse and HSBC - issued “neutral.”

Nomura has set its target mark for Kospi at 3,000 and Citigroup at the range of 2,400 - 3,000. Goldman Sachs and Credit Suisse predicted the index could reach 2,900 this year. Bank of America Merill Lynch, JP Morgan, and HSBC marked their target at around 2,800.

Korea has the second-most number of “overweight” ratings in Asia following China.

In the report, the foreign investment banks picked global economic recovery, improvement in Korean corporate governance structure, and growing investor preference for riskier assets as positive factors for Korean stocks.

They, however, warned of downside risks such as moderation in demand with economy slowing down its growth pace, higher-than-expected inflation, Korean won’s strengthening against the U.S. dollar, and North Korea-related geopolitical risks.

Korea has extended stock market rally since last year, with the main Kospi index rising 21.8 percent on year to finish the last trading session of year 2017 at 2,467.49 and secondary Kosdaq jumping 26.4 percent to 798.42, closing 2017 at a 10-year high. Offshore investors net purchased 9.4 trillion won ($8.7 billion) worth of Korean stocks in Kospi and Kosdaq.

By Shin Heon-cheol and Cho Jeehyun

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