[Good Morning Stock Market] Positive Outlook on China's With-Corona Policy... Major Shareholder Sell-Off Volume as a Variable

Institutional Buying Expected to Continue Ahead of Ex-Dividend Date (28th)

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] On the 27th, the Korean stock market is expected to continue seeing buying pressure from institutional investors ahead of the ex-dividend date (28th). The Chinese government's expansion of 'With Corona' measures and the full-scale reopening are also favorable factors. While major stock markets in the US and Europe were mostly closed, the US dollar weakened, and currencies such as the euro strengthened against the dollar. The exchange rate is also positive for the Korean stock market.

Seo Sang-young, Head of Mirae Asset Securities Division: "KOSPI expected to rise slightly... sustained buying pressure centered on institutional investors is possible"

On the 27th, the Korean stock market is expected to show a firm performance after a slight rise at the start. This is because buying pressure centered on institutional investors for dividends is likely to continue.

The biggest news is that the Chinese government has expanded measures related to 'With Corona.' China will abolish facility quarantine for inbound travelers from overseas starting January 8 next year. Accordingly, people entering China from abroad will only need to undergo home quarantine and health monitoring for a certain period. PCR testing will also be abolished. This means China may end its 'Zero-COVID policy.' Expectations for increased Korean exports are likely to grow.

Mastercard announced that US retail sales during the year-end shopping season after November increased by 7.6% compared to the previous year, and the number of consumers on Boxing Day in the UK surged by 50% compared to the previous year, which is also favorable. Consumption is a factor that alleviates concerns about a global economic slowdown.

Of course, this increase in consumption, along with China's With Corona issue, could raise the possibility of prolonged high inflation, but the current market is more focused on recession issues, which is positive for investment sentiment.

Han Ji-young, Kiwoom Securities Researcher: "Selling volume to avoid major shareholder requirements is a variable"

Today, the Korean stock market is expected to face downward pressure on supply and demand for certain stocks caused by net selling from individuals. This is because, following the previous day, intraday volatility may increase due to a temporary rise in selling volume as individuals try to avoid major shareholder requirements.

Individuals must reduce the market value of their holdings to 1 billion KRW or lower, or reduce their shareholding ratio to 1% (KOSPI) or 2% (KOSDAQ) by two trading days before the closing date (29th) to avoid being classified as major shareholders. The possibility that the market value of holdings could rise above 1 billion KRW due to price increases during the two days (28th?29th) must also be considered.

However, the Ministry of Economy and Finance announced after the market closed the previous day that it will complete the revision of the Income Tax Act enforcement decree within the year, easing the scope of capital gains tax on major shareholders from "10 billion KRW per stock including the individual and family members" to "10 billion KRW for the individual only," which is expected to act as a buffer.

Also, today is the last trading day to receive next year's dividends. Considering this, buying pressure with a short-term dividend investment strategy centered on traditional high-dividend stocks such as food and beverages is expected to support the downside of the domestic stock market.

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