Market analysts in South Korea are turning grimmer on the outlook for 2022 as they expect slowdown in profits of companies on reduced base effect of the Covid-19 pandemic.

According to sources from the financial investment industry on Sunday, 13 local brokerage houses estimated that the benchmark Kospi would reach between 2,800 and 3,400 on average in 2022. It is lower than the projections made by local brokerages a month earlier, under which the bottom had been projected at 2,800 by Samsung Securities, 2,850 by Shinhan Financial Investment and KTB Investment Securities, and 2,950 by Kiwoom Securities. Most of them predict the Kospi would go up to 3,400 to 3,500.

KB Securities was most sanguine, forecasting the Kospi could reach as high as 3,600, the highest among the 13 brokerages on bottoming out and up cycle in the economy.

But local securities firms that released their market predictions for 2022 in November presented gloomier outlook. DB Financial Investment said the Kospi would move between 2,650 and 3,200, as companies’ earnings consensus could be revised down on margin pressure in the first half. There would be downward pressure in the market if inflation grows faster than the economy, it added.

EBEST Investment & Securities predicted the Kospi to reach between 2,740 and 3,150 based on its analysis of the market’s movement after 2015.

The analysts turn bleak on increased concerns over the global supply disruptions and rising inflation. HI Investment Securities said interest rate movement could be a strong factor in the market next year as an increasing number of countries have seen their economies’ leading indicators weighed down by recent key rate hikes.

Analysts also predict that Korean companies would no longer benefit from the low base effect from the pandemic. Meritz Securities said companies listed on Kospi would record 175 trillion won ($147.4 billion) in combined net profit in 2022, 7 percent lower than the estimation for this year.

But they also expect the global economy could rebound when the supply disruptions and inflation fears are eased. Korea Investment & Securities said that price movement will define the next year’s market performance because the economy could be buoyed if the inflationary pressure peaks and begins to decline in the first half.

On Monday, the Kospi closed 1.42 percent higher at 3,013.25.

By Cha Chang-hee and Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]