[Good Morning Stock Market] Increasing Influence of External Factors... Sectoral Differentiation Expected

US Focuses on China's Real Economy Data Release... Potential Changes in Foreign Investor Flows

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Minwoo Lee] As key real economy indicators from the US and China are set to be released this week and changes in the Federal Reserve (Fed) officials' inflation assessments are anticipated, the influence of macroeconomic variables on the domestic stock market is expected to increase. While the KOSPI attempts to stabilize above the 3000 level, supported by improved foreign investor demand conditions, sectoral differentiation based on individual themes is expected to emerge.

◆ Ji-young Han, Kiwoom Securities Researcher= Amid persistent high inflation caused by supply shortages, the shock from the US October Consumer Price Index (CPI) released on the 10th has further spread concerns about the Fed's early tightening. As of the 13th, the probability of a 25 basis point (bp) rate hike at the June Federal Open Market Committee (FOMC) meeting next year, as reflected in US interest rate futures, rose sharply to 49.6% from 33.1% on the 13th of last month. The shock in the November University of Michigan Consumer Sentiment Index (71.7, expected 66.8) announced on the 12th, marking the lowest level since November 2011, also stemmed from inflation concerns.

However, as confirmed by the US stock market rally on the 12th, market participants appear to be developing resilience to worries about supply shortages, inflation, and the Fed's early tightening. Since both the Fed and market participants tend to react to data retrospectively and incorporate it into prices, the key issue is the progress in resolving supply shortages and whether future inflation expectations related to this change.

It is noteworthy that the US government is currently considering releasing strategic petroleum reserves to address rising oil prices, which are hindering the real economy's recovery. Although this measure has not been finalized, it is positive to view the current supply shortage issue as being within a controllable range.

Since last month, the KOSPI has secured downside support around the 2900 level, but market confidence remains insufficient regarding a return to an upward trend after stabilizing above 3000. In the short term, the index's upper range is expected to be limited as it digests the concentration in specific thematic stocks such as non-fungible tokens (NFTs), metaverse (expanded virtual worlds), and gaming. However, considering the market's increased resilience to macroeconomic variables and the potential improvement in foreign investor demand due to the perception of the domestic market being oversold, a strategy of gradually increasing exposure to large-cap stocks is appropriate.

◆ Sang-young Seo, Mirae Asset Securities Researcher= The US stock market's rally on the 12th (local time), centered on metaverse-related stocks, is expected to have a positive impact on the domestic stock market. It is particularly noteworthy that despite ongoing high inflation concerns, buying interest has flowed into innovative industries. Although there are short-term concerns about high corporate valuation burdens, expectations for new industries remain high.

With persistent high inflation concerns, pressure on the year-end shopping season continues, but in the short term, a thematic stock market centered on these sectors is expected. On the 15th, the domestic stock market is expected to open with a rise of around 0.5%, but rather than continuing the upward trend, changes centered on individual stocks are anticipated. Furthermore, following the release of China's real economy indicators on the same day, changes in foreign investor demand are expected depending on exchange rate fluctuations.

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