[Trump Again] Stock Volatility Expected to Rise with 'Super Trumpism'

Executive Orders to Be Issued Immediately After Inauguration Put Market on Alert
Concerns Over Market Volatility, but Much Already Priced In
Necessary to Respond with Sectors Like Entertainment, Shipbuilding, and Defense

On the 20th (local time), market attention is focused on the inauguration of the Donald Trump administration. This is because the impact on the stock market due to the strengthening of the America First policy, known as 'Super Trumpism,' is expected to be inevitable. The domestic stock market, which has been recovering from last year's sluggishness and regaining stability this year, is likely to face increased volatility around the time of Trump's presidential inauguration.

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Executive Orders to Be Issued After Inauguration Raise Concerns Over Increased Volatility

According to the Korea Exchange on the 20th, the KOSPI closed at 2523.55 on the 17th, down 0.16% from the previous session. There is a growing cautious stance ahead of Trump's inauguration.

Seonghoon Lee, a researcher at Kiwoom Securities, stated, "It is expected that President-elect Trump will push forward numerous executive orders immediately after his inauguration, primarily focusing on policies related to immigration, energy, trade, and tariffs. Among these, noise regarding tariff policies has already stimulated stock market volatility since the beginning of the year, but the initial targets for tariff imposition are expected to be China, Canada, and Mexico. Additionally, it is necessary to consider that Scott Bessent, the nominee for U.S. Treasury Secretary, reiterated that tariffs will be used as a 'negotiation tool' to correct unfair trade practices with other countries, which somewhat alleviates concerns about tariffs."

Considering that the domestic stock market showed weakness following Trump's election victory last November, it is true that concerns over Trump risk are not insignificant ahead of the inauguration. Since numerous executive orders are expected immediately after the inauguration, the possibility of market turmoil cannot be ruled out. Sanghyun Park, a researcher at iM Securities, said, "Although the recent sharp rise in U.S. Treasury yields is primarily due to inflation risks and uncertainties surrounding the Federal Reserve's interest rate policy, concerns about Trump's second-term policies are also a significant factor. Major policies expected to be pursued through executive orders immediately after the inauguration include immigration, energy, and small government policies. The 'shock and awe' approach of pushing 'mega bills' right after the inauguration is likely to cause considerable volatility in the financial markets."

According to local media, President-elect Trump is reportedly preparing more than 100 executive orders on his first day in office. Jaehong Yoon, a researcher at Mirae Asset Securities, analyzed, "During his first term, Trump issued 220 executive orders and other administrative actions, significantly revising existing policy directions or swiftly implementing policy agendas. Announcing nearly half of the total executive orders immediately after inauguration can be interpreted as a focus on rapid execution of campaign promises and policies."

Risk Already Priced In → Possibility of Relief Rally

However, since the Trump risk has already been priced into the market, there is also an opinion that a relief rally could be reflected immediately after the inauguration. Kyungmin Lee, a researcher at Daishin Securities, said, "While the impact of policies such as tariff imposition on inflation and fiscal concerns on the market is uncertain, the market is currently tense, having priced in uncertainty with the worst-case scenario in mind. The anxiety that has been priced in may instead be reflected as a reduction in uncertainty and a relief rally in the market after Trump's inauguration."

To respond to the volatile market conditions following Trump's inauguration, it seems necessary to focus on sectors that can avoid tariff risks. Junghwan Na, a researcher at NH Investment & Securities, said, "In the early stages of his term, President-elect Trump is likely to adopt a strategy to enhance external negotiation power, and he may strongly suggest the possibility of imposing gradual universal tariffs of 2-5% monthly. This is a factor that increases stock price volatility in the short term, so it is necessary to respond by focusing on sectors that cooperate with Trump or can avoid tariff risks." Na identified the entertainment, defense, and shipbuilding sectors as such industries. He explained, "The entertainment sector is one that can partially avoid Trump's tariff risks, as concert revenues are service consumption, and albums and MD products, which are goods subject to tariffs, can pass on costs to consumers. Additionally, the shipbuilding and defense sectors have maintained strong stock performance since being identified as beneficiaries of Trump last year."

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