Global asset manager Blackrock on Monday painted a rosy forecast for the South Korean stock market in the second half of the year, saying it plans to increase its holdings of local shares going forward.

"Valuations in Korea are at a cheap level and positive earnings surprises have characterized performance in the year to date," Andrew Swan, Head of Asian Equities, said in a statement, adding the company will snap up shares "to capture an expected positive environment for the second part of the year."

The forecast comes as the benchmark Korea Composite Stock Price Index  is trending higher, backed by gains in key exporters and retailers. The main stock index has gained more than 6 percent this year from the end of 2014.

The asset manager, meanwhile, projected investment circumstances to vary from country to country.

"Asia is currently subject to differing forces, leading to contrasting trends in the region and illustrating the need for a flexible approach to investment," said Swan, noting slowing growth in key emerging economies such as China and India.

Regarding the U.S. Federal Reserve's expected rate hike, Blackrock forecast the move to take place after September.

It said that while the rate normalization "has the potential to threaten the dynamics supporting the global hunt for yield," Asian economies have the "financial firepower to weather the storm," citing their ample foreign currency reserves, domestic savings pools, healthy fiscal balances and investment grade ratings. (Yonhap)