[Weekly Market Outlook] Eyes on the Reopened US Economy... Expecting a 'Pause' Market Phase

US Begins Resuming Economic Activities Nationwide
US-China Clash Over Hong Kong National Security Law 추진

[Asia Economy Reporter Minji Lee] Despite weak real economy indicators, the KOSPI continued its upward trend due to expectations of economic activity resumption in various countries and a rebound in sentiment indicators. Next week, market attention is expected to focus on the normalization of economic activities in the United States following the lifting of lockdown measures. Additionally, concerns about potential trade frictions between the US and China are likely to draw attention. Accordingly, on the 24th, the securities industry forecasted a breathing period for the market due to the burden on the rapidly rising stock prices. Hana Financial Investment projected the KOSPI range to be between 1950 and 2000, while NH Investment & Securities expected it to move between 1940 and 2030.

[Image source=Yonhap News]

The United States began resuming economic activities nationwide after lifting the lockdown in Connecticut on the 20th. This decision is more of a desperate measure to prevent further economic recession rather than a sign of the COVID-19 pandemic easing. Therefore, the market believes it is necessary to monitor whether the number of confirmed cases increases. Since the early lifting of lockdowns, 17 states have seen a more than 10% surge in new confirmed cases within a week of resuming activities, and Ford also reverted to shutdown just two days after restarting its factory due to confirmed cases.

Yonggu Kim, a researcher at Hana Financial Investment, explained, “If the improved quarantine system prevents further virus spread, there will be a limited economic recovery centered on non-face-to-face manufacturing. However, if the virus spreads again, there is a high possibility of a full-scale reversal of the recent gains.”

The escalating conflict between the US and China is a cause for concern. The US's containment of China, which began this year with the COVID-19 responsibility debate, is expected to intensify further due to President Trump's political calculations. There are also concerns that China’s sudden introduction of the 'Hong Kong National Security Law' could act as a new flashpoint in US-China tensions.

Namjoong Moon, a researcher at Daishin Securities, said, “The stock market, which has begun to move beyond a range that investors can rationally understand, will take a moment to listen to negative factors. The start of China’s Two Sessions, the Chinese government’s response to attacks from the Trump administration, and the semiconductor market’s slowdown due to decreased demand for IT devices will stimulate profit-taking.”

However, the gradual concretization of the Korean New Deal is positive for the market. The government plans to simultaneously promote economic advancement and job creation through building digital infrastructure, fostering non-face-to-face industries, and digitalizing social overhead capital.

Donggil Noh, a researcher at NH Investment & Securities, explained, “It is known that the Green New Deal, which reorganizes industries focusing on low-carbon renewable energy, will be included, and the market is reflecting expectations that the third supplementary budget will be swiftly pushed forward with the launch of the 21st National Assembly. The gradual concretization of the Korean New Deal can raise policy expectations and act as a factor driving the domestic stock market’s rise.”

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