[Good Morning Market] KOSPI, Eyes on China's Two Sessions and Powell

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[Asia Economy Reporter Park Jihwan] This week, the domestic stock market is expected to be greatly influenced by China’s largest political event, the Two Sessions (Lianghui), and remarks from US Federal Reserve Chairman Powell. Attention is focused on the scale of economic stimulus measures that will be announced at the Two Sessions, held as a response to the novel coronavirus disease (COVID-19). There is also keen interest in whether there will be any change in stance regarding Chairman Powell’s opposition to the negative interest rate policy requested by President Trump. Additionally, concerns are rising over the impact on the domestic semiconductor industry, a key sector, due to the US’s policy to impose a full ban on semiconductor exports to China’s Huawei.

◆ Seo Sangyoung, Kiwoom Securities Researcher = It is necessary to pay attention to news from the China Two Sessions and Chairman Powell’s remarks. The domestic stock market is expected to fluctuate depending on the opening of the China Two Sessions, statements by Fed Chairman Powell, and earnings announcements from US companies. In particular, it is important to watch whether Premier Li Keqiang will announce large-scale infrastructure investments as a healing measure for the Chinese economy post-COVID-19 at the opening ceremony of the National People’s Congress. Furthermore, what Chairman Powell mentions during the Senate hearing on the 19th and his speech on COVID-19 and the economy on the 21st is also crucial. The noise related to the recently highlighted US-China trade friction remains a burden.

◆ Park Heechan, Mirae Asset Daewoo Researcher = Positive factors such as expectations for easing economic lockdowns and recovery in international oil prices, combined with negative factors including warnings about the future economic situation from the FRB and IMF, deflation concerns, and the pattern of US-China conflicts, are overlapping, causing a correction trend in global stock markets. The differentiated movement between Korea’s KOSDAQ and the US Russell 2000 index is noteworthy. As an index representing small and mid-cap stocks, the Russell 2000 index has shown a weak recovery after a sharp drop. In contrast, the KOSDAQ index is recovering to its previous peak. The strength of the KOSDAQ is related to the strong performance of growth stocks (IT technology and healthcare), but caution is needed as small and medium-sized enterprises may have weaker resilience in the current economic crisis situation.

◆ Lee Kyungmin, Daishin Securities Researcher = It is judged that the decision to resume economic activities was made based on political and economic considerations that controlling COVID-19 is possible and that the side effects of halting economic activities are greater. The OECD Leading Economic Index and real indicators of Korea, which did not stop economic activities, and China, which resumed in March, clearly show the picture of an upcoming economic turnaround. The flow of economic indicators and changes in economic outlook after resuming economic activities are expected to act as strong momentum. Even if short-term fluctuations continue, the driving force for the KOSPI’s rise is strengthening.

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