Brokerages see "limited" KOSPI impact from Middle East risk, say oil prices remain key variable

[The Financial News] Attention is focusing on whether the United States of America (USA) and Israel’s airstrikes on Iran will spill over into the domestic stock market.
On the 1st, analysts in the securities industry said volatility could increase in the short term, but the impact on the local stock market would likely be limited. Some also expect that if the index undergoes a correction, bargain hunting by retail investors could come in and provide support on the downside.
Kim Seok-hwan, a researcher at Mirae Asset Securities, told Yonhap News Agency on the 1st, "The United States and Israel’s attack on Iran could have a negative impact on the stock market in the short term," adding, "As the geopolitical clash has materialized, the domestic market is likely to open lower." However, he continued, "If intraday losses deepen, 'buy-the-dip' sentiment is likely to kick in and attract individual investors," and noted, "Given that the domestic market has often rebounded on intraday buying even amid external uncertainties, its recovery resilience should remain relatively strong."
The view is further supported by the assessment that, considering the United States' political calendar, the situation is unlikely to drag on for an extended period.
Lee Kyung-soo, a researcher at Hana Securities, also told Yonhap News Agency, "The fact that the United States launched the strike over the weekend appears intended to minimize the shock to financial markets," and added, "The United States is also heading into midterm elections, so it would be burdensome to let the conflict drag on. It is highly likely to remain a short-term bout of volatility."
Meanwhile, forecasts for international oil prices are divided.
Barclays, which frequently publishes research reports on commodity and energy markets, projected that if tensions in the Middle East lead to supply disruptions, Brent crude oil could rise to around 80 dollars per barrel and, in the worst case, climb to 100 dollars.
Citing market experts, Reuters reported on the 28th (local time) that "geopolitical uncertainty may push up oil prices in the short term, but over the longer term, additional production from OPEC Plus (OPEC+) and the global supply-demand balance will determine the direction of prices."


jashin@fnnews.com Shin Jin-ah Reporter