[Good Morning Stock Market] Economic Recovery Optimism vs US-China Conflict Risks... KOSPI Fluctuates Repeatedly

[Asia Economy Reporter Oh Ju-yeon] Since the beginning of this month, the KOSPI, which approached the 2000 level, has since fluctuated around the 1990 level. The securities industry expects that the stock market, which plummeted due to the novel coronavirus infection (COVID-19), has rapidly surged in the short term, increasing valuation burdens and potentially stimulating profit-taking sentiment, making it difficult for the KOSPI to firmly establish itself above the 2000 mark in the short term. However, there is an analysis that even if a short-term correction occurs, the correction depth is likely to be shallow.

◆ Sangyoung Seo, Kiwoom Securities Researcher = On the previous day (the 25th), the Korean stock market showed strength despite the intensifying US-China friction surrounding Hong Kong, driven by expectations of economic reopening. In particular, although the market fluctuated around the flat zone in the early session due to US-China tensions, it expanded gains toward the latter part of the session, supported by expectations of economic recovery from the reopening of economies worldwide and the US's active vaccine development announcements. Meanwhile, the sharp rise in European stock markets, fueled by expectations of economic reopening in various countries, acted as a bullish factor for the Korean stock market.

Of course, burdens such as the ongoing expansion of US-China friction over Hong Kong and the possibility of a resurgence in COVID-19 cases remain, so the rise in the Korean stock market is expected to be limited. In particular, even if countries worldwide reopen their economies, the recovery speed in some countries like the US, where new COVID-19 cases have not significantly decreased, may be delayed, which is a concern. In fact, most Federal Reserve members, including Chairman Powell, recently mentioned economic recovery in the second half of the year but warned that the pace would be delayed. Considering this, the Korean stock market on the 26th is expected to start higher but with limited gains and undergo a process of digesting sell-offs.

◆ Kyungmin Lee, Daishin Securities Researcher = The KOSPI is rising by over 1%, expanding its gains. Amid renewed US-China conflicts related to the Hong Kong National Security Law issue, the market focused on the reopening of major economies and early development hopes for a COVID-19 vaccine, leading to gains. The software sector, known as a beneficiary of the untact (contactless) culture, continues its sharp rise.

Samsung Electronics and SK Hynix are fluctuating around the flat zone, but the KOSPI is rising because so-called untact beneficiaries like Kakao, Naver, and NCSoft continue their sharp gains. Kakao contributes 2.5 points, Naver 2 points, and NCSoft 1 point to the KOSPI's rise, with these three stocks alone pushing the KOSPI up by more than 5.5 points. Additionally, pharmaceutical bio and electric vehicle-related stocks such as Samsung Biologics, Samsung SDI, and LG Chem are also showing strong gains, contributing over 4.5 points to the rise.

While it is true that burdens from the recent rapid surge are increasing, considering recent market changes and structural shifts in the market during the COVID-19 overcoming process, it is judged that the leading stocks are becoming clearer. If liquidity momentum and improvements in economic indicators (real economy indicators) become visible, a secondary upward trend centered on leading stocks is expected to develop again.

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