[Asia Economy Reporter Oh Ju-yeon] On the 3rd (local time), as the U.S. stock market closed higher again, the KOSPI, which had surged well above the 2100 mark, is showing a stronger tendency toward rising rather than falling. The Dow Jones Industrial Average closed at 26,269.89, up 2.05% from the previous day, the S&P 500 rose 1.36% to 3,122.87, and the Nasdaq ended the session up 0.78% at 9,682.91. Domestic securities firms expect that although there is short-term overheating and increasing valuation pressure, a sharp decline like that in March is unlikely, even if a short-term correction occurs.
◆ Lee Kyung-min, Researcher at Daishin Securities: As of the 3rd, individual investors’ cumulative net purchases in 2020 have exceeded 27 trillion won. Most of these purchases were in large-cap stocks, which reduced the available liquidity of large-cap stocks. During the KOSPI’s rise, top market cap stocks such as Naver, Kakao, and Samsung SDI experienced sharp gains of 7-10%.
Recently, foreign investors’ net buying has focused on neglected sectors and stocks, and on the 3rd, a large net purchase of futures by foreigners led to a large net purchase by institutions (financial investment). This is judged to have caused the sharp rise of top market cap stocks to contribute to the KOSPI’s level-up.
It is true that short-term overheating and valuation pressure are intensifying. At the current index and valuation levels, short-term corrections can occur at any time. However, the possibility of a sharp decline like in March is considered low. Rather, considering the strong liquidity momentum and the realization of economic recovery expectations in the second half of the year, it is necessary to use this as an opportunity to increase exposure. Although uncertainties that could trigger short-term corrections are accumulating, liquidity and fundamental momentum are stronger and are expected to strengthen further.
◆ Seo Sang-young, Researcher at Kiwoom Securities: The domestic market surged the previous day as Microchip Technology raised its earnings forecast, causing the domestic semiconductor sector to rally sharply, and risk asset preference increased based on government policies. On the 3rd, the U.S. market is expected to continue to have a favorable impact, with the Philadelphia Semiconductor Index rising 2.87% due to the Microchip effect and others.
However, related issues have been priced in, and some companies like Raymond have expressed concerns, stating, "We are not afraid, but the semiconductor sector’s price increase does not reflect actual demand, and demand normalization has not yet occurred," which suggests that a process of digesting sell orders for related stocks is inevitable.
Nevertheless, as is characteristic of the U.S. stock market, it is expected to continue showing a positive outlook for economically sensitive stocks. This is because economic indicators such as China’s and the U.S. service sector indices are showing improvement trends. Additionally, expectations for further stimulus policies, such as expanding asset purchases at the ECB monetary policy meeting on the 4th, are high, which is favorable. However, ongoing frictions such as the suspension of flights between the U.S. and China increase profit-taking desires. Moreover, due to large-scale futures trading by foreigners and the spread of the "watchdog" phenomenon, the market is becoming sensitive to supply and demand factors, so changes are expected depending on their trading, warranting close attention.
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