'Boring KOSPI Box Range'... US-China Economic Indicators and FOMC Minutes as Variables

Average Daily Trading Value Falls Below 20 Trillion Won This Month... Down 25% Compared to Last Month
Stock Market Rally Driven by Sectors: Chemicals, Energy, Automobiles, IT Hardware, Semiconductors

On the 10th, employees are working at Hana Bank in Myeongdong, Seoul. On this day, the KOSPI closed at 3,100.58, up 15.91 points (0.52%) from the previous trading day. [Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] The KOSPI index, which surpassed 3,200 points earlier this year, is expected to enter a full-fledged box range market after the Lunar New Year holiday. Securities firms unanimously agreed that since the speed of the KOSPI index's rise is bound to slow down, sectoral return differentiation is expected, requiring a meticulous investment strategy. When the KOSPI rises rapidly, sectors generally rise together, but when the pace slows, the degree of differentiation between sectors increases.

According to Shinhan Financial Investment on the 14th, the KOSPI rose by 14.3% and 10.9% in November and December last year, respectively. The number of sectors that rose was 26 and 22, respectively. However, in January this year, the return was 3.6%, and the number of rising sectors was 16, indicating a slowdown in the pace of increase. The degree of sectoral differentiation can be measured by the average monthly sector return difference, and the figure for January this year was 1.26 percentage points, the highest since February 2008.

Researcher Bae Han-joo of Shinhan Financial Investment said, "In the short term, as the pace of index rise slows, interest in profits is likely to expand." He added, "Sectors such as steel, finance, and consumer staples, which have underperformed in stock price rises compared to profit improvements, are likely to show strength." He further explained, "In the mid to long term, attention should be paid to existing leading sectors that can drive a revaluation of the KOSPI valuation." He identified chemical, energy, automobile, IT hardware, and semiconductors as sectors currently showing good profit momentum and expected to lead the stock market rise.

Meanwhile, there was no significant momentum to drive the domestic stock market rise, and trading volume also plummeted. According to the Korea Exchange, the average daily trading volume of the KOSPI from the 1st to the 10th was 19.8 trillion won, a 25.0% decrease from last month (26.5 trillion won). Compared to January 11, when the trading volume reached an unprecedented high of 44 trillion won, it is practically halved. The market capitalization turnover rate (the ratio of trading volume to market capitalization) also decreased. This month's turnover rate averaged 0.93% per day, the lowest monthly figure since November last year (0.89%).

Researcher Lee Kyung-min of Daishin Securities diagnosed, "In a situation where internal momentum has weakened, the market continues to watch external variables." He pointed out that after the Lunar New Year holiday, key variables will include real economy indicators from the US and China and the minutes of the US Federal Open Market Committee (FOMC) meeting. Lee said, "Since the US stock market has risen significantly, at this point, sensitivity to bad news is greater than to good news, so short-term volatility should still be approached with caution."

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