[Good Morning Stock Market] "Policy Expectations Rise with China's Two Sessions... Domestic New Growth Industries Expected to Maintain Leadership"

On the 19th, ahead of the opening of the Two Sessions, China's largest political event, public security officers wearing masks were marching in front of the entrance to the Forbidden City in Beijing. This year's Two Sessions are being held about two months later than usual due to the COVID-19 pandemic. (Photo by AFP)

[Asia Economy Reporter Kum Boryeong] The Two Sessions, China's largest political event postponed due to the novel coronavirus infection (COVID-19), will be held from the 21st. Along with this, expectations for policies from the Chinese government are rising. The domestic market is analyzed to maintain the leadership of new growth industries such as IT software and healthcare for the time being amid both hopes and concerns about COVID-19 vaccine development.

◆ Jo Byunghyun, researcher at Yuanta Securities = From today (21st), the schedule of the Two Sessions, China's largest political event, will proceed. The years 2020-2021 in China mark the end of the 13.5 economic plan period and the beginning of the 14.5 economic plan period, as well as the 100th anniversary of the founding of the Communist Party of China and the completion of a moderately prosperous society, making it a period of great significance for China in the mid to long term. Therefore, even before COVID-19, there was interest in government policies on new industries and domestic demand stimulation, and although the COVID-19 situation caused the postponement of the Two Sessions, expectations for policy support have increased based on this experience.

Recently, the domestic stock market is seen as forming a mood of stock-specific rallies and diffusion rather than an index-driven flow led by large-cap stocks. Under this market atmosphere, as previously examined, it is judged that interest in China's economic stimulus and industrial policies may increase around the time of the Two Sessions. China's policy can be seen as focusing on 'domestic demand stimulation + new infrastructure'; given the existence of issues such as the resumption of the US-China trade dispute and sanctions on Huawei, it is considered worthwhile to prioritize interest in the concept of 'China + domestic demand stocks.'

◆ Lee Yesin, researcher at Shinhan Financial Investment = On the 20th, the KOSPI approached 1990, and the KOSDAQ surpassed 700. It is the first time since June 26, 2019, that the leading digit of KOSDAQ has recorded '7.' Attention should be paid to the market movements in the early week. Following the news on the 18th (local time) that US biotech company Moderna succeeded in the first phase clinical trial of a COVID-19 vaccine, expectations and concerns about vaccine development appeared sequentially, expanding skepticism about changes in market sentiment. On the day when vaccine development expectations expanded, large-cap cyclical stocks such as automobiles and travel, which had been suppressed by the COVID-19 outbreak, rebounded unexpectedly, emphasizing the lifting of shutdowns after therapeutic development and the sharp recovery of deferred demand. However, after just one day, caution against premature optimism about the first phase clinical trial results increased, and the market turned its attention back to new growth industries.

The leading stocks driving the stock market remain IT software and healthcare. These are new growth industry groups amid the industrial landscape changes following the spread of COVID-19, which have been continuously mentioned. The relative attractiveness of growth stocks within the Korean stock market, whose industrial portfolio is relatively well composed, remains valid, and the market sentiment is expected to be maintained for the time being.

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