[Good Morning Stock Market] KOSPI Barely Holds 2700 Level, Will It React to US Stock Market Rise?

US Stock Market Closes Higher Across All Three Major Indexes on Additional Stimulus Expectations
Additional Stimulus Expectations Positive... Gains Expected to Be Limited
Foreign Investors Withdraw Funds for 2 Consecutive Trading Days "Profit-Taking Following Short-Term Rally"

[Asia Economy Reporter Oh Ju-yeon] On the 8th, the domestic stock market reacted to the possibility of delays in the US additional stimulus package negotiations, with the KOSPI ending its five-day consecutive rise and closing down for the first time in December, while the KOSDAQ index fell for the first time in nine trading days.

The correction was also significant. The KOSPI closed at 2700.93, down 1.62% from the previous trading day, falling more than 50 points from the intraday high of 2754.01 on the 7th. The KOSDAQ index, which had shown an unstoppable upward trend from 891.29 to 926.88 since December, plunged 2.16% on the 8th. While the market showed a correction amid accumulated fatigue from the rise, the US stock market overnight drew attention by closing higher with a record-breaking streak. The Dow Jones Industrial Average closed at 31,073.88, up 0.35% from the previous day, the S&P 500 rose 0.28% to close at 3702.25, marking the first time it closed above the 3700 level, and the Nasdaq index rose 0.5%, continuing its record-breaking streak. Although the market started lower amid debates over the additional stimulus package, it closed higher due to growing expectations for the UK's vaccine rollout and the stimulus package agreement. The domestic stock market is expected to change depending on the supply and demand of foreigners who have led the index rise so far.

[Image source=Yonhap News]

◆ Seo Sang-young, Kiwoom Securities Researcher = The Korean stock market fell yesterday due to a large sell-off by foreigners amid rising concerns over the expansion of US-China friction and a no-deal Brexit (the UK's withdrawal from the European Union). Although these issues have been ongoing, the market had continued to rise due to foreigners' active net buying in certain sectors, so the foreigners' selling is presumed to have triggered the index correction.

In particular, considering that the sell-off seems to be profit-taking mainly in some semiconductor and pharmaceutical sectors that had recently surged, the short-term market direction is expected to be determined depending on whether the selling pressure continues consecutively.

Meanwhile, despite several positive factors, the limited rise in the US stock market suggests that the rebound in the Korean stock market is likely to be limited. Of course, positive news related to the US additional stimulus package is favorable, but the dollar's strength against other currencies and the weak performance of international oil prices may limit foreigners' active buying.

Considering this, the Korean stock market is expected to rise but within a limited range, and a stock-specific market trend influenced by individual stock issues, typical of global stock markets, is expected to continue.

◆ Han Dae-hoon, SK Securities Researcher = There are sharply opposing views on whether the recent stock market will continue its upward trend or face a short-term correction due to overheating. Since November, foreign investment funds have flowed into the domestic stock market, supporting the rise, so the two consecutive days of foreign capital outflow are concerning.

The biggest reason for the over 1% decline, which occurred only once in November, was profit-taking from the short-term rise in sectors that have driven the market. The return of foreign funds to the domestic market since November is due to the easing of US political uncertainty and the high attractiveness of KOSPI within emerging markets (EM). The continued strength of the Korean won is also positive. These three factors are expected to continue for some time, so the existing view that it is difficult to conclude a trend of foreign capital outflow is maintained.

However, major upcoming events this week and next week may spread a wait-and-see sentiment. These events include difficulties in US stimulus package negotiations, the US Electoral College vote (14th), the Federal Open Market Committee (FOMC) meeting (16th), and Quadruple Witching Day (10th), which could raise caution.

The upward trend until next year remains valid, but depending on the outcomes of these events, short-term sideways movement should also be considered. In the short term, dividend stocks ahead of the year-end dividend season are favored, and from a strategic perspective looking toward next year, the company maintains its strategy to respond with semiconductor, secondary battery, and IT software (ITSW) sectors as suggested in the annual outlook.

◆ Seo Jung-hoon, Samsung Securities Researcher = Last night, the New York stock market closed higher across all three major indices, buoyed by expectations for an additional stimulus package. The hope that COVID-19 vaccinations will soon begin in the US also supported the market.

Expectations for the US government's additional stimulus package have become somewhat more concrete. Bloomberg reported that senior Republican lawmakers have begun discussions with key Treasury and White House officials regarding the stimulus package. On the same day, Senate leaders from both the Republican and Democratic parties emphasized the need for additional stimulus. However, disagreements remain regarding state government support and other issues.

Expectations for the COVID vaccine also continued. Following the UK, Pfizer, preparing to launch its vaccine on the US mainland, is likely to receive emergency approval from the US Food and Drug Administration (FDA) on the 10th. According to a report released by the FDA advisory committee on the day, Pfizer's vaccine showed no particular safety issues and demonstrated 95% efficacy after the second dose. Pfizer had previously stated that vaccination could begin within 24 hours once FDA emergency approval is confirmed.

The domestic stock market appears to be exposed to fatigue from consecutive rises. Some profit-taking to relieve overheating is deemed necessary. However, considering stable liquidity conditions, the decline during the correction is expected to be limited.

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