On the afternoon of the 21st, when the KOSPI fell close to 1%, an employee passes in front of the index bulletin board at Hana Bank’s dealing room in Jung-gu, Seoul. [사진=연합]
This week (January 24-28), the domestic stock market is expected to heighten vigilance ahead of the Federal Open Market Committee (FOMC) of the US Federal Reserve. As LG Energy Solution is also scheduled to go public, it is expected that supply-demand uncertainty will continue. In addition, the expectation that wait-and-see sentiment will flow ahead of the Lunar New Year holiday is also a burden on the stock market. The financial investment industry advised investors to pay attention to IT and mobility-related industries, which have low risk of further declines, but have growth momentum and can rise strongly in the event of a rebound, saying that portfolio compression is necessary.
Over the past week (January 17-21), the KOSPI fell 2.99% (87.63 points), showing a sluggish figure. The stock price fell on 4 out of 5 trading days. While individuals net bought 1.69 trillion won, foreigners and institutions net sold 705.8 billion won and 595.4 billion won, respectively, leading the share price decline. There was a supply and demand gap as funds poured into LG Energy Solutions’ subscription for public offering shares, and geopolitical risks such as US inflation concerns, tech stock regulations, and military confrontation with Russia were mixed, resulting in a cold market atmosphere.
This week, the market is in full swing.
This week, the domestic stock market is expected to show volatility due to a pile of events. Hana Financial Investment offered 2840-2940 points as the KOSPI forecast band this week, and NH Investment & Securities offered 2800-2950 points. Kim Young-hwan, a researcher at NH Investment & Securities, said that this week’s KOSPI rise was due to △ inflow of personal funds after a large IPO △ South Korean government’s stimulus measures for domestic demand △ presidential election policy expectations. I mentioned the prospect of waiting ahead.
The biggest inflection point that determines the direction of the stock market this week is the FOMC. As the December FOMC minutes were announced more hawkish than expected, various forecasts have been pouring in regarding the timing of interest rate hikes. An uptrend is expected as the issue is resolved, but until the lid is opened, a vigilant sentiment may weigh on the market. Kim Yu-mi, a researcher at Kiwoom Securities, said, “There is a consensus that the timing of an interest rate hike will be advanced to March, and the possibility of introducing quantitative austerity measures in the second half of the year has also begun to be reflected.” “The uncertainty about the Fed’s monetary policy is higher than ever before,” he said. Kim Young-hwan, a researcher at the FOMC in January, also said, “There is a discussion about raising the base rate and reducing assets at the FOMC in January, but the uncertainty is unlikely to be resolved. “This is a situation that supports the Fed’s austerity transition,” he said.
In addition, geopolitical risks and wait-and-see sentiment ahead of the Lunar New Year holiday are burdening the market. Researcher Kim Young-hwan said, “In general, market trading volume decreases and the wait-and-see attitude tends to increase when the Lunar New Year holiday is approached.” As this is still there, the wait-and-see sentiment will be strong.” Jae-sun Lee, a researcher at Hana Financial Investment, said, “The domestic stock market is expected to remain vigilant this week. He predicted that large events such as the January FOMC meeting on the 26th and the listing of LG Energy Solutions on the 27th will form an inflection point in the stock market volatility at the end of the month. He also explained that the upward pressure on oil prices triggered by geopolitical risks and the consequent rise in real interest rates are a burden on risky asset prices such as stocks.
Use the stock as an opportunity to buy growth stocks
Experts say that a decline in stock prices should not be viewed unconditionally as a negative. Rather, he advised that the company should use this as an opportunity to buy undervalued growth stocks with guaranteed earnings growth as their prices have fallen.
Seunghwan Yeom, director of eBest Investment & Securities Co., Ltd., said, “Companies with attractive valuations among companies with guaranteed growth this year can be a buying opportunity at a low price. “We need to increase the proportion of auto stocks,” he said. He continued, “Until February, it is still advantageous to respond to low-value stocks rather than high-value companies.”
Shin Seung-jin, a researcher at Samsung Securities, said, “The concerns over supply and demand following the listing of LG Energy Solutions are at a peak this week. The attractiveness of their relative prices will be highlighted.” He advised that we should pay attention to Korea Zinc, which is expected to be re-evaluated as it enters the materials business, although cell companies such as SK Innovation and their main businesses are undervalued compared to materials companies that have good growth potential but are burdened with value. He added, “Portfolio compression is necessary when the market is uncertain. This includes IT/mobility companies that have low downside risk but can be strong in a rebound phase due to growth momentum.”
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