"Back to 9,000 again? It could plunge below 5,200"... Sogang University professor warns investors to increase cash holdings

[Financial News] An expert has forecast that the won-dollar exchange rate could fall to the 1,200-won range over the medium term, while the KOSPI could drop below the 5,200 level in the first half of next year.

Kim Young-ik, an adjunct professor at Sogang University's Graduate School of Economics, appeared on the KBS YouTube channel MoneyHola on the 15th. He offered this outlook on global macroeconomic conditions and the prospects for South Korea's stock market, advising investors to reduce their stock holdings and increase cash-like assets.
Professor Kim said headwinds were piling up, with the yield on 10-year U.S. Treasury bonds recently touching 5% intraday, international oil prices exceeding $106 per barrel, and growing calls to slow the pace of AI semiconductor development. He also analyzed that the KOSPI entered a downturn after peaking at 9,385 intraday in June.
He said, "In the long run, the KOSPI will continue to rise, but there are always ups and downs in the cycle," adding, "The KOSPI rose to 9,385 intraday last June, and it appears to have entered a downturn after reaching that peak." He continued, "These downturns typically last at least a year."
He continued, "The KOSPI fell to around 5,200 intraday, but that is not the bottom of this cycle," adding that, because headwinds from the United States still lie ahead, "it could fall further below that level in the first half of next year."
He also said, "When the leading index was rising, I advised investors to significantly increase their stock holdings. But now that it is falling, they should reduce their stock holdings and increase cash-like assets. The benchmark is the cyclical component of Statistics Korea's Composite Leading Indicator, which is at the point of turning downward after peaking in August." He said investors needed to adjust their asset allocations.

Professor Kim forecast that the exchange rate would rebound in the short term before declining over the medium term. Explaining, "The exchange rate has fallen sharply from 1,550 won to 1,340 won, but it will rebound," he added, "In terms of the broader trend, a decline from 1,550 won to the 1,200-won range has begun over the medium term."
He added, "If the exchange rate moves this way, per-capita national income could exceed $40,000 this year. That would be negative for export companies, so analysts covering Samsung Electronics, SK hynix and Hyundai Motor are lowering their earnings forecasts. However, a weaker exchange rate could lower import and producer prices and help stabilize inflation."
Instead, he advised Korean individual investors investing in overseas stocks to beware foreign-exchange losses. Professor Kim explained, "They could lose money if the exchange rate continues to fall. For the past two years, I have forecast a decline in the dollar index and a stronger won, and advised investors to buy more domestic stocks than U.S. stocks. When the dollar index falls, the KOSPI rises relatively more than the S&P 500."
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