[Weekly Market Outlook] US Presidential Election Concerns... Potential for Increased Volatility

[Asia Economy Reporter Oh Ju-yeon] As the U.S. presidential election approaches in November, stock market volatility is increasing. It is widely expected that this volatility will continue in October, resulting in a sideways trading range.

According to the securities industry on the 4th, various securities firms forecast the KOSPI index to trade between 2200 and 2450 points in October.

NH Investment & Securities predicted that the KOSPI could fluctuate within a box range of 2200 to 2450 points in October, recommending a portfolio strategy that adjusts weightings toward value stocks near the upper bound of the range and toward growth stocks near the lower bound. Kiwoom Securities expected the index to fluctuate between 2200 and 2350 points.

Seosangyoung, a researcher at Kiwoom Securities, said, "October's stock market will be a month where attention shifts from liquidity-driven conditions to fundamentals," adding, "Since the credit extension by individual investors is unlikely to continue increasing significantly, the stock market currently shows a large gap from fundamentals."

Seosangyoung further analyzed, "Volatility has been increasing since mid to late August when bubble concerns began to rise due to expanded liquidity supply, and this is expected to continue affecting the stock market in October."

Accordingly, market participants are expected to respond sensitively to factors that increase volatility, such as downward revisions in economic outlooks, poor economic indicators due to the resurgence of COVID-19, and uncertainties surrounding the U.S. presidential election.

However, there is analysis suggesting that after easing overheating and valuation pressures, the market could resume an upward trend.

Lee Kyung-min, a researcher at Daishin Securities, stated, "The improvement in fundamentals is becoming visible," diagnosing that "economic indicators have continued to surprise positively since COVID-19, and recently economic forecasts and corporate earnings projections have been revised upward."

Lee added, "Considering the period from 2016 to early 2018 when economic and corporate earnings forecasts were simultaneously revised upward, the global stock market maintained an upward trend for two years," emphasizing, "What is different now is that liquidity and policy momentum have flowed in, and their intensity is at an all-time high."

He continued, "Unprecedented scale and intensity of liquidity and fiscal policy have been injected in a short period," concluding, "The upward trend of the global stock market and the KOSPI could be stronger than expected."

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