September Stock Market Expected to Be Range-Bound, Which Stocks to Watch?

Concerns Over Early Tapering Eased
KOSPI Expected at 3000-3300 Range
Focus on Growth Stocks Like BBIG Until Interest Rate Hikes
Preference for Large-Cap Stocks Over Small and Mid-Caps

[Asia Economy Reporter Song Hwajeong] After a weak stock market in August, the market is expected to move within a range in September, requiring more cautious sector responses. Growth stocks with individual momentum appear advantageous for the time being, but appropriate strategy shifts will be necessary depending on interest rate changes.

As of 9:25 a.m. on the 30th, the KOSPI recorded 3,152.03, up 18.13 points (0.58%) from the previous day, continuing its rise for two consecutive days. The market seems to be relieved by the outcome of the Jackson Hole meeting. Jerome Powell, Chair of the U.S. Federal Reserve (Fed), mentioned at the Jackson Hole meeting that tapering (reduction of asset purchases) could begin within the year but dismissed concerns about an early interest rate hike, which is seen as resolving uncertainties.

Although concerns about early tapering and interest rate hikes have subsided for now, the September stock market is expected to move within a range. Kim Daejun, a researcher at Korea Investment & Securities, stated, "We set the KOSPI band for September at 3,000 to 3,260," adding, "Following August, the index is expected to show a zigzag movement in September. For the index to rebound, investor sentiment, which has been subdued, needs to recover, but a rapid improvement in sentiment is unlikely at the moment."

Lee Kyungmin, a researcher at Daishin Securities, said, "The KOSPI is expected to fluctuate within the 3,000 to 3,300 range for the time being," and analyzed, "Whether the KOSPI surpasses and stabilizes above 3,200 in September could narrow the short-term trading range." He added, "To break out of the range and resume a mid- to long-term upward trend, two conditions are necessary: renewed expectations for KOSPI 2022 earnings centered on semiconductors and a downward trend in the won-dollar exchange rate. Until semiconductor and KOSPI earnings forecasts and won-dollar exchange rate changes are confirmed, it is necessary to maintain composure, keep a short grip on the bat, and focus on short-term trading."

Attention should continue to be paid to growth stocks, including bio, battery, and internet sectors. Researcher Kim said, "The style phase model still signals that investing in new growth stocks is advantageous," emphasizing, "Particular attention should be paid to stocks with individual momentum." Lee Jaeseon, a researcher at Hana Financial Investment, noted, "During the actual tapering in 2014, sectors such as cosmetics, hotel & leisure, and essential consumer goods, which played the role of growth stocks in the KOSPI, showed strong stock prices," adding, "The current stock market is already reorganized around growth stocks."

Researcher Noh Donggil of Shinhan Financial Investment said, "The BBIG (Battery, Bio, Internet, Game) ratio relative to KOSPI market capitalization rebounded starting early June," and forecasted, "Although the BBIG operating profit ratio compared to KOSPI still falls below 6%, its growth rate is steep. Considering the profit momentum of growth stocks like BBIG, growth stocks will be spotlighted from a long-term perspective amid a slowdown in KOSPI profit growth."

However, the variable of interest rate hikes is expected to be unfavorable for growth stocks, so close attention should be paid to the timing of rate increases. Researcher Noh explained, "Due to the possibility of delays in tapering, additional market interest rate increases are limited, which could enhance the attractiveness of growth stocks with short-term profit growth," but added, "However, after mid-September, there is a possibility of value stock rotation along with debt ceiling negotiations."

In September, the focus is expected to gradually shift from small- and mid-cap stocks to large-cap stocks. Researcher Noh said, "The reason small- and mid-cap stocks like those on KOSDAQ outperformed large caps was that they were relatively less affected by foreign net selling and domestic liquidity growth rates were higher than export growth rates," adding, "Foreign net selling has peaked, and exports are expected to exceed liquidity growth rates, creating an environment favorable to large-cap stocks in the latter half of September."

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