Market Reacts "Generally Positive" to Biden's Infrastructure Investment Policy Including "Jeungse"

[Asia Economy Reporter Lee Seon-ae] On the 30th, the domestic stock market started on an upward trend. This is interpreted as having received a positive impact from the partial release of the Biden administration's second fiscal stimulus package on the 31st (local time).

On this day, the KOSPI opened at 3,038.44, up 0.08%. As of 9:31 a.m., it was recording 3,054.05, up 0.59%. The KOSDAQ started at 954.54, up 0.05%, and is currently at 957.59, up 0.37%.

It is interpreted as sending a positive signal regarding the Biden administration's infrastructure investment policy, which includes tax increases.

The Biden administration's stimulus package, which focuses on infrastructure investment with more than $3 trillion (approximately 3,390 trillion KRW), is divided into △ 'physical' infrastructure investments such as civil engineering and eco-friendly projects △ social infrastructure investments such as education and healthcare. However, tax increases are also implemented to raise funds. U.S. Treasury Secretary Janet Yellen stated that this infrastructure plan would be accompanied by tax increases. Accordingly, the calculation of the market impact has become complicated as tax increases and economic improvement effects intertwine.

However, David Lefkowitz, head of U.S. equities at UBS Financial Services, told MarketWatch, "An increase in the corporate tax rate could moderately pull down the U.S. stock market, but American companies will still be able to achieve healthy net profit growth." He also predicted, "Since the tax increase is at least partially for infrastructure-related spending, this will boost economic growth rates and partially offset the stock market decline caused by the tax increase."

Looking at trading trends by investor type, individual investors, tired of the correction market, are selling 62.4 billion KRW worth in the KOSPI market. In the KOSDAQ market, they are net buyers with 21.1 billion KRW. Foreigners are net buyers of 37.8 billion KRW in the KOSPI market but net sellers of 18.1 billion KRW in the KOSDAQ market. Institutions are net buyers in both markets, purchasing 29.2 billion KRW in KOSPI and 3.1 billion KRW in KOSDAQ.

Among the top market capitalization stocks in KOSPI, Samsung Electronics, SK Hynix, Naver, Samsung Biologics, and Hyundai Motor are on the rise, while only LG Chem and Celltrion are declining. By sector, paper and wood (1.70%), finance (1.51%), insurance (1.34%), and transportation equipment (1.30%) are strong, whereas transportation and warehousing (-1.13%), steel and metals (-0.90%), construction (-0.71%), and textiles and apparel (-0.65%) are weak.

Meanwhile, on the 29th (local time), major indices on the New York Stock Exchange closed mixed due to the impact of a large block deal (massive trade) and other factors.

On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,171.37, up 98.49 points (0.30%) from the previous session. The Standard & Poor's (S&P) 500 index fell 3.45 points (0.09%) to 3,971.09, and the tech-heavy Nasdaq index dropped 79.08 points (0.60%) to 13,059.65.

The Dow Jones Industrial Average closed at an all-time high. It has set a new record 17 times this year alone.

Kiwoom Securities researcher Kim Yumi said, "The margin call issue, which was a burden on the U.S. stock market, was partially reflected in the domestic stock market the day before, and the rebound in the U.S. stock market is positive for the domestic market. However, concerns about U.S. tax increases, U.S.-China friction, and a strong dollar are factors limiting the rise in indices."

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