[Good Morning Stock Market] US-Iran Tensions May Trigger Global Economic Slowdown Concerns

[Asia Economy Reporter Oh Joo-yeon] There is an analysis that friction between the United States and Iran could trigger concerns about a global economic slowdown. Although the likelihood of a full-scale war between the U.S. and Iran is low, it could limit stock market rebounds.

◆ Lee Jae-man, Researcher at Hana Financial Investment = Geopolitical risks between the U.S. and Iran are escalating, providing a pretext for a correction in global stock markets. The rise in international oil prices limits the central banks' room for monetary easing policies, and the manufacturing sector's sentiment is weak, particularly leading to issues such as corporate margin contraction. Looking at the relationship between quarterly changes in international oil prices (WTI) and operating profit margins based on the S&P 500, before the global financial crisis, operating profit margins averaged 12.3% when oil prices rose and 11.6% when they fell, a difference of 0.7 percentage points. After the global financial crisis, operating profit margins averaged 13.0% when oil prices rose and 13.1% when they fell, a difference of only 0.1 percentage points, indicating that the impact of international oil prices on U.S. corporate margins has diminished compared to before the global financial crisis.

Considering the critical threshold of international oil prices, since 1990, when international oil prices rose more than 20% quarterly, the probability of a quarterly decline in the S&P 500 index increased to 60%. Currently, if WTI exceeds $70 per barrel, the index is likely to enter a mid-term correction phase. The momentum change expectation is important for the first quarter stock market. This is evidenced by the fact that over the past three years, stocks in sectors with upward revisions in momentum indices and earnings estimates have shown strong performance in the first quarter.

◆ Seo Sang-young, Researcher at Kiwoom Securities = Friction between the U.S. and Iran is highly likely to stimulate concerns about a global economic slowdown. This is expected to burden countries with high export dependence, such as Korea. However, the likelihood of a full-scale war between the U.S. and Iran is low. Both the U.S. and Iran have significant concerns about economic slowdown, making the worst-case scenario of full-scale war unlikely. Therefore, there seems to be no need to assume and respond to the worst case immediately, and attention should be paid to Iran's future responses. Until then, it is expected that the process of absorbing profit-taking selling will continue. Meanwhile, the Korean stock market has adjusted nearly 2.5% from its peak since the related issue arose on the 3rd, suggesting a temporary rebound.

However, the Philadelphia Semiconductor Index fell 1.04%, indicating profit-taking selling in stocks that had significant gains in 2019, which is a burden. Additionally, analyses (Susquehanna) and reports (MarketWatch) suggesting that Apple's 5G phone may be released in the first half of 2021 rather than the second half of 2020 are also factors contributing to the decline in semiconductor-related stocks. The weakness of semiconductor-related companies is expected to limit the rebound of the Korean stock market as well. Considering this, the Korean stock market is expected to fluctuate around the flat range, and attention should be paid to foreign investors' supply and demand for semiconductor-related stocks.

This content was produced with the assistance of AI translation services.