Next Week's KOSPI Variables: US Economic Indicators, Russia War... Index Expected at 2670~2800P

"Inflation-Related Stocks, Endemic Transition Stocks, Focus on Oversold Growth Stocks"

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] In the last week of March, there is a forecast that the KOSPI index will rise due to expectations of strong U.S. economic indicators and the domestic COVID-19 peak phase. However, caution is advised as the stalemate in Russia-Ukraine peace negotiations and international oil prices could negatively impact the stock market.

Kim Young-hwan, a researcher at NH Investment & Securities, stated, "Strong U.S. economic indicators are expected to drive a moderate rise in the stock market, but a large increase is difficult due to inflationary pressures such as high oil prices."

Kim explained, "Federal Reserve Chair Jerome Powell cited the labor market as a basis for confidence in the economy in the March Federal Open Market Committee (FOMC) statement, noting that 'job growth has been strong in recent months, and the unemployment rate has also fallen.'"

Investment sentiment is expected to be determined by the results of major economic indicators announced in the first week of April. Starting with the U.S. Consumer Confidence Index on the 29th (forecast 108.0, previous 110.5), followed by Nonfarm Payrolls (forecast 41,500, previous 654,000), Unemployment Rate (forecast 3.7%, previous 3.8%), and ISM Manufacturing Index (forecast 58.5, previous 58.6) are scheduled.

Kim also cited the domestic COVID-19 situation entering the peak phase as a factor for stock price increases. He explained, "The number of new confirmed cases is fluctuating around 300,000 to 400,000. The quarantine authorities judge that the Omicron wave has entered the peak phase, but the point at which new confirmed cases show a clear downward trend has not yet been reached." In fact, Son Young-rae, head of the Social Strategy Division of the Central Disaster and Safety Countermeasures Headquarters, said at a regular briefing on the 24th, "We have entered the peak, and the increase in confirmed cases is showing a stagnation pattern, but it is currently difficult to determine when the decline will begin, and we need to observe the situation this week."

However, the possibility of a prolonged Russia-Ukraine war remains a variable.

Kim said, "Military experts have suggested that the front lines are in a stalemate and that the conflict could extend into a long-term war lasting several months. For the war to end quickly, peace negotiations between both sides need to be concluded and actually implemented within this period, but there are significant disagreements over security guarantees and territorial issues that hinder the peace agreement."

Considering these factors, Kim emphasized, "It is more important to select sectors that can outperform the market rather than focusing on the potential for index gains."

He added, "Since sector rotation is rapid, it is necessary to respond by focusing on sectors that have risen relatively less but can gain momentum in the current market environment. Attention should be paid to inflation-related stocks, endemic transition-related stocks, and heavily oversold growth stocks."

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