[Good Morning Stock Market] "KOSPI Expected to Start Slightly Lower... Foreign Buying Momentum Is Key"

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] On the 28th, the KOSPI is expected to start slightly down but then show an upward trend. Foreign investor flows are likely to be important for the domestic stock market today.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 31,438.26, down 62.42 points (0.20%) from the previous session. The S&P 500, focused on large-cap stocks, ended at 3,900.11, down 11.63 points (0.30%), and the tech-heavy Nasdaq closed at 11,524.55, down 83.07 points (0.72%).

Sangyoung Seo, Head of Mirae Asset Securities: "KOSPI to start slightly down... Continued strength expected following yesterday"

Sangyoung Seo, Head of Mirae Asset Securities, stated, "The Korean stock market is expected to start in a slightly down range but will continue its strength following yesterday."

Seo explained, "Although the U.S. stock market declined due to profit-taking, the easing of the 'recession' issue will have a positive impact on the Korean stock market," adding, "The weakening of the dollar and yen, along with rising government bond yields, has increased risk asset preference."

Seo also emphasized, "It is worth noting that the energy and semiconductor sectors, which were weak last week in the U.S. market, showed strength due to rebound buying."

He evaluated, "The increased risk asset preference, which was one of the reasons for the Korean stock market's decline last week, is expected to improve overall investor sentiment," and "In particular, foreign buying driven by won strength amid dollar weakness is expected to continue, which is a positive factor."

Seo forecasted, "The MSCI Korea Index ETF is flat, the MSCI Emerging Markets Index ETF rose 0.12%, and the offshore non-deliverable forward (NDF) 1-month USD/KRW rate is 1,286.25 won. Reflecting this, the exchange rate is expected to start lower in January," concluding, "Accordingly, the KOSPI is expected to start slightly down."

Jiyoung Han, Kiwoom Securities Researcher: "Downward pressure expected... Sectoral differentiation anticipated"

Jiyoung Han, a researcher at Kiwoom Securities, predicted, "The domestic stock market on the 28th will face downward pressure due to short-term profit-taking following the sharp rebound over the past two trading days and selling to reduce existing position losses."

Han forecasted, "From a sector perspective, energy-related sectors, which showed weak momentum in the recent rebound amid the reappearance of rising oil prices, are expected to maintain a firm trend. However, some growth stocks that experienced a short-term sharp rise will likely take a breather, leading to differentiated market performance across sectors."

She emphasized, "Since supply and demand issues such as credit short selling and increased volatility in foreign futures and spot trading patterns contributed to the decoupling between the Korean and U.S. stock markets since June, attention should be paid to changes in foreign investor flows during the trading day."

Meanwhile, the Atlanta Federal Reserve's Q2 GDP Now estimate was recorded at 0% in mid-June, raising recession concerns. However, the updated estimate on the 27th (local time) was revised upward to 0.7%, somewhat easing worries about two consecutive quarters of negative growth.

Han noted, "Since GDP Now updates incorporate major economic indicators released throughout the month, variability is expected depending on key data such as May PCE and June ISM Manufacturing PMI scheduled for release during the week," adding, "Normally, the importance of frequently updated GDP Now figures is not high, but the market sensitivity to recession outcomes arising from the 'inflation → Fed tightening → demand slowdown' sequence is higher than in the past."

She pointed out, "Ultimately, until the preliminary Q2 growth rate is released at the end of July, debates among market participants about technical or soft recession (a short-term recession lasting one to two quarters) are expected to continue."

She added, "The likelihood of a repeat of the June crash is low, and technical rallies are expected to continue," but cautioned, "Whether the bear market ends (currently Nasdaq down 29% from its peak, KOSPI down 28% from its peak) depends on key events such as June CPI, Q2 growth rate, July FOMC, and earnings season results."

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