[Good Morning Stock Market] Rebound Buying Expected Amid Oversold Perception... "Stock-Specific Market Anticipated"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Myung-Hwan Lee] On the 20th, the domestic stock market is expected to show an upward trend as rebound buying flows in amid perceptions of excessive declines following recent drops.

On the previous day, the 19th, the domestic stock market closed lower across the board due to cautious sentiment ahead of the Federal Open Market Committee (FOMC) meeting and the strength of the US dollar. On that day, the KOSPI closed at 2,355.66, down 1.14% (27.12 points) from the previous trading day, and the KOSDAQ index closed at 751.91, down 2.35% (18.13 points) from the previous trading day.

The US stock market, which started lower due to recession concerns, turned upward supported by bargain buying, which is also expected to have a positive impact on the domestic stock market. On the 19th (local time), the Dow Jones Industrial Average closed at 31,019.68, up 0.64% (197.26 points) from the previous trading day. The S&P 500 index rose 0.69% (26.56 points) to 3,899.89, and the tech-heavy Nasdaq index closed at 11,535.02, up 0.76% (86.62 points).

Sang-Young Seo, Head of Media Content Division at Mirae Asset Securities: "Stock-specific market amid rebound buying... Expectations for Apple parts stocks"

[Image source=Reuters Yonhap News]

On the 20th, the KOSPI is expected to start with an increase of around 0.5%, followed by a stock-specific market. Although volatility may increase due to the continued strength of the dollar and rising government bond yields ahead of the FOMC, the rebound buying sentiment following recent declines is also strong. Sectors such as Apple parts, semiconductors, and secondary batteries are expected to lead the rally.

The US stock market fell nearly 1% early in the session due to recession concerns but narrowed losses as rebound buying flowed in, which is expected to have a positive effect on the domestic stock market. While the semiconductor sector remains solid, companies that showed strength in the US stock market rose as expectations for improved earnings were highlighted.

It is also favorable that Apple and Tesla showed strength due to earnings expectations, raising optimism for related stock groups. Apple rose on expectations of an increase in the average selling price of iPhones, and Tesla rose on news that sales in Germany this year will double compared to last year. In the domestic stock market, stocks expected to improve earnings are also forecasted to rise.

Ji-Young Han, Researcher at Kiwoom Securities: "Buying flows expected due to perception of excessive decline... Focus on sectors with profit growth"

On the 20th, the domestic stock market is expected to rebound supported by buying flows amid perceptions of excessive declines, the US stock market rebound, and expectations for the easing of the rapid rise in the won-dollar exchange rate. Although price volatility itself is expected to increase around the September FOMC scheduled for this week, the trailing price-to-book ratio (PBR) of the KOSPI is at the same valuation level as the intraday low recorded on July 4, suggesting that valuation attractiveness will support the market bottom.

Since interest rates are related to the discount rate in corporate valuations, it is true that rising interest rates have often been unfavorable for the stock market in the past. However, it is important to note that even during past periods of base rate hikes, when earnings growth itself was supported, it offset the discount rate burden and stock prices rose. Currently, the market is highly sensitive to macro factors, and it is impossible to accurately estimate the peak of interest rates. Nevertheless, it is considered appropriate to simultaneously look for sectors and stock groups (such as automobiles, machinery, IT) expected to show solid profit growth during the third-quarter earnings season.

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