[Weekly Market Outlook] Slowed Uptrend Near 2500 Threshold... "Tug of War Between Buyers and Sellers"

Weakening of Individual Net Buying Amid Rising Stock Prices
Possibility of Sequential Index Decline Pressure in Global Markets

Continued Rotation Market... Interest in Value Stocks
Focus on China-Related Consumer Stocks as Yang Jiechi, China's Foreign Affairs Chief, Visits Korea

[Asia Economy Reporter Oh Ju-yeon] The domestic stock market has surged to the 2480 level, coming close to the 2500 mark. However, there are analyses suggesting that the pace and strength of the rise may somewhat slow down. In the U.S. stock market, although the Nasdaq index is leading the upward trend, there is an explanation that a pattern may emerge where the Nasdaq index is followed by downward pressure on the S&P 500 and Dow Jones indices in sequence. Attention is being drawn to the weakening buying power of individual investors, who have supported the rise in the domestic stock market so far.

On the 16th, NH Investment & Securities projected the KOSPI expected band for the third week of August to be between 2400 and 2500. They pointed out that while the short-term upward momentum may continue, the buying strength of individuals is weakening.

On the 11th, when the KOSPI index surpassed the 2,400 mark for the first time in 2 years and 2 months, dealers were working in the Hana Bank dealing room in Euljiro, Seoul. Photo by Mo Honam munonam@

Kim Young-hwan, a researcher at NH Investment & Securities, said, "Customer deposits have exceeded 50.3 trillion won and credit loan balances have surpassed 15.6 trillion won, indicating that individual funds are flowing into the stock market," adding, "This trend can continue until a new external variable emerges that changes the trading direction of individuals." He explained that the momentum market led by individuals could sustain the upward trend in stock prices. However, he noted that the gradual weakening of individual buying strength is noteworthy.

Researcher Kim stated, "It is not easy to be the first to jump off during a liquidity party, but it is necessary to gradually reduce exposure within growth stocks, leaving only the core," and added, "As an alternative to growth stocks, attention should be paid to value stocks with defensive characteristics." He cited secondary batteries, software, automobiles, telecommunications, and food and beverages as sectors of interest.

There are also forecasts that the global stock market's upward momentum may gradually weaken.

Daishin Securities predicted that the U.S. stock market in the third week of August will show a tug-of-war between buying and selling to maintain the current state at the final stage of the rising phase.

Moon Nam-jung, a researcher at Daishin Securities, said, "The current Nasdaq index, which has shown the second-largest increase after the dot-com bubble, considering this year's less favorable investment environment compared to the dot-com bubble period, is bound to end in a correction (a price adjustment with the rise in mind) around mid-August (the 13th), when it reaches a similar number of rising days without matching the dot-com bubble period's returns."

Researcher Moon added, "Since mid-March, when the global stock market bottomed out after the COVID-19 pandemic, 4.6 months (142 days) have passed, and the Nasdaq index's rise rate (as of the 12th) is 60.5%, showing a 27.3 percentage point gap from the dot-com bubble's highest return (87.8%). While the return alone might suggest the possibility of further gains, considering the number of rising days, the current Nasdaq index has already reached 13 days, the same as during the dot-com bubble," and analyzed, "Considering the dot-com bubble case, it is near the peak, so preparations for a future correction are necessary."

Meanwhile, it is known that Yang Jiechi, a member of the Political Bureau of the Chinese Communist Party responsible for foreign policy, is likely to visit South Korea next week, raising the possibility that Chinese-related consumer stocks may gain attention.

Han Dae-hoon, a researcher at SK Securities, said, "As he oversees China's foreign policy, discussions about Chinese President Xi Jinping's visit to South Korea within this year are expected to accelerate," and predicted, "During the rotation process, funds may continue to flow into stocks that have experienced excessive declines."

However, Researcher Han added, "Due to the massive liquidity released into the market, the stock market may continue to move regardless of fundamentals, but since this is not a trend change, it is necessary to keep positions short and respond in the short term."

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