[MarketING] Minefield Stock Market, When Is the Right Time to Buy?

KOSPI and KOSDAQ Start Down but Turn Up
'Minefield Stock Market' Amid Tightening and Recession Concerns

The KOSPI turned to an upward trend after starting lower. Despite ongoing concerns about tightening, worries about an economic recession have also emerged, weighing on the market and limiting the extent of gains. It is expected that a period of adjustment will continue for the time being, and some opinions suggest that if the index approaches or falls below the important support range of 2500?2550, it should be used as an opportunity to increase exposure.

KOSPI Turns Upward After a Decline at Opening... Shows Slightly Firm Trend

As of 10:15 a.m. on the 26th, the KOSPI was at 2,575.69, up 5.59 points (0.22%) from the previous day. The KOSDAQ rose 2.30 points (0.26%) to 877.14.

[Image source=Yonhap News]

On this day, both the KOSPI and KOSDAQ started lower but then reversed to an upward trend. Individual investors drove buying in the KOSPI, while foreign and institutional investors bought in the KOSDAQ, changing the direction of the indices. However, the gains were limited. With ongoing concerns about tightening and the emergence of recession fears, the market is under pressure. On the 23rd, the U.S. stock market also closed lower amid growing concerns about recessions in the U.S. and Europe. On the 23rd (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 0.65%, the S&P 500 dropped 0.77%, and the Nasdaq declined 1.01% compared to the previous day.

NH Investment & Securities analyst Na Jung-hwan explained, "Stock prices fell as safe-haven asset preference increased due to weak economic indicators and concerns about economic slowdown in Europe and the U.S."

The Eurozone composite Purchasing Managers' Index (PMI) for June was 50.3, down from 52.8 announced last month, marking the lowest level since January. The services PMI declined to 52.4 from 55.1 last month, and the manufacturing PMI also weakened to 43.6 from 44.8 last month.

The U.S. composite PMI for June also slowed from 54.3 to 53.0. The manufacturing PMI dropped to 46.3 from 48.4 last month, significantly below the expected 48.5. The services PMI decreased slightly to 54.1 from 54.9, exceeding the forecast of 54.0.

Mirae Asset Securities analyst Seo Sang-young said, "Recent data, including the Conference Board's May Leading Economic Index declining 0.7% month-on-month and the Chicago Federal Reserve's National Activity Index contracting into negative territory, confirm concerns about economic slowdown. The contraction in PMI further increased the possibility of a global economic slowdown." He added, "These data results heightened safe-haven asset preference, leading to a stronger dollar, rising government bond prices (i.e., falling bond yields), and higher gold prices."

With recession fears resurfacing, attention should be paid to the earnings of major U.S. companies such as Nike and Micron. Kiwoom Securities analyst Han Ji-young said, "For a while, market attention was focused on central bank tightening, but now we face the issue of recession again. The earnings of major U.S. companies like Nike (on the 26th) and Micron (on the 29th) are expected to be key points to watch. Their earnings and future guidance are directly linked to overall consumer demand and front-end demand in the semiconductor sector, so depending on the results, the stock price sensitivity of semiconductor and other export stocks will vary."

Short-Term Adjustment Expected to Continue... Increasing Exposure Effective at 2500?2550 Range

As a short-term adjustment period is expected to continue, opinions suggest that a strategy of increasing exposure by utilizing volatility is effective in the 2500?2550 range.

Daishin Securities analyst Lee Kyung-min said, "The KOSPI is currently digesting overbought conditions with the 2650 level acting as resistance. External uncertainties, overbought pressures, and domestic factors are all stimulating market volatility, so an unstable trend is likely to continue."

The adjustment period is expected to last until mid-next month. Hyundai Motor Securities analyst Lee Jae-sun said, "The adjustment will continue until the U.S. Consumer Price Index (CPI) announcement scheduled for the 12th and the start of the U.S. earnings season from mid-July. Until then, emerging market stocks are likely to face relative pressure from interest rates and the dollar, but the possibility of a price correction remains limited."

It is analyzed that an exposure-increasing strategy is effective at the important support zone of 2500?2550. Analyst Lee Kyung-min explained, "From a valuation perspective, the primary important support zone can be considered the 2500?2550 range. The 60-day moving average, known as the supply-demand line, is also located around 2540 points in this range. If the KOSPI approaches or falls below the 2550 level, a strategy to increase exposure by utilizing volatility is effective."

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