By Samir Al Khoury,
The Korean KOSPI index recorded 2,896 points yesterday, marking its highest level since 18 January 2022. This index has risen approximately 27% from its low of 2,273 points on 31 October last year to yesterday’s close at 2,886 points. It has also increased by 10% from the beginning of the year until yesterday’s session close.
Recent Korean economic data shows the resilience of the Korean economy:
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The Manufacturing Purchasing Managers’ Index rose in July, registering 52.0 points, up from 51.6, its highest level since April 2022.
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The trade balance index rose in June to $8 billion, surpassing expectations of 5.24 billion and the previous reading of 4.86 billion.
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The industrial production index increased by 3.5% year-on-year in May, exceeding expectations of 3.1%.
 Additionally, the Consumer Price Index (CPI) in South Korea declined to 2.4% in June, lower than both expectations and the previous reading of 2.7%. This figure is closer to the South Korean Central Bank’s target rate of 2%, potentially encouraging the central bank to consider reducing interest rates in the near future. Korean interest rates have remained fixed at 3.50% since January 2023.
From a technical standpoint, the outlook for the Korean KOSPI index is encouraging, with the major challenge being to reach and surpass the psychological level of 3,000 points. The Relative Strength Index (RSI) recorded approximately 71 points, indicating that it is in the overbought zone and reflecting positive momentum for the KOSPI index.
The positive movement index (DMI+) is approximately 40 points, compared to the negative movement index (DMI-), which stands at around 12 points. This significant gap suggests strong buying pressure on Korean stocks. More importantly, the ADX trend strength indicator records about 27 points, which is above the 25-point threshold, indicating that the momentum of this upward trend is strong.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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