[Good Morning Stock Market] KOSPI Expected to Start Higher Due to Unreflected Positive Factors During Market Holiday... Focus on Foreign Investor Flows

[Image source=Yonhap News]

[Asia Economy Reporter Myung-Hwan Lee] On the 16th, the domestic stock market is expected to start higher and then focus on foreign investors' supply and demand. This is because it is likely to be influenced by the improvement in the U.S. consumer sentiment index and real economy indicators such as China's industrial production and retail sales, which were not reflected due to the closure during the Liberation Day holiday.

The indices for China's July industrial production and retail sales, announced on the 15th, all fell significantly short of market expectations. China's industrial production in July increased by 3.8% compared to the same period last year, lower than the market expectation of a 4.5% increase. July retail sales rose 2.7% year-on-year, significantly below the market expectation of a 5% increase.

Major U.S. stock indices closed higher despite weak Chinese economic indicators. On the 15th (local time), the S&P 500 index closed at 4297.14, up 0.40% (16.99 points) from the previous session. The Dow Jones Industrial Average rose 0.45% (151.39 points) to 33,912.44, and the tech-heavy Nasdaq index closed at 13,128.05, up 0.62% (80.87 points) from the previous session.

The first housing supply plan of the Yoon Suk-yeol administration, scheduled to be announced on the same day, is also expected to have some impact on the domestic stock market. This is because construction and architecture-related companies are expected to benefit from the supply plan.

Kim Seok-hwan, Mirae Asset Securities Researcher: "Reflecting U.S. and China real economy indicators... Foreign investor sentiment improves with Lee Jae-yong's pardon"

On the 16th, the KOSPI is expected to start higher by around 0.5%. On this day, the KOSPI will focus on foreign investor inflows while reflecting the improvement in the U.S. consumer sentiment index and real economy indicators such as China's industrial production and retail sales, which were not reflected due to the Liberation Day holiday. Additionally, the first housing policy of the Yoon Suk-yeol administration, the '2.5 million+α' supply plan, is scheduled to be announced during the trading session. This supply plan is expected to focus on revitalizing redevelopment and reconstruction projects to expand housing supply in Seoul and the metropolitan area, so companies with assets such as construction, architecture, and idle land in the metropolitan area are expected to benefit.

Thanks to the improvement in the global macro environment, foreign investors' preference for risk assets is expected to continue. Considering that foreign capital inflows are continuing not only in the stock market but also in the bond market, the strength of emerging markets, including South Korea, is expected to persist for some time. In particular, the special pardon and reinstatement of Samsung Electronics Vice Chairman Lee Jae-yong last Friday resolved the anticipated judicial risks for the owner family, which is expected to positively affect foreign investors' investment sentiment.

Han Ji-young, Kiwoom Securities Researcher: "Digesting unreflected positive factors from the holiday... Weight expansion through phased buying is necessary"

The domestic stock market is expected to show an upward trend as it digests external positive factors that were not reflected during the holiday period, such as the slowdown in expected inflation in the U.S. and consecutive rises in major countries' stock markets centered on the Nasdaq. Overall, positive price movements are expected regardless of large-cap or small- and mid-cap stocks, but international oil price declines and weak Chinese real economy indicators should be considered. The price momentum among energy stocks, Chinese consumption-related stocks, inflation-affected stocks, and growth stocks is expected to be differentiated.

The U.S. Nasdaq has been seeking a turnaround since July and has rebounded more than 20% from its low. This is believed to stem from valuation attractiveness, a favorable Q2 earnings season, and growing confidence that inflation has peaked following the U.S. July consumer price index release. Additional signs of inflation easing, such as the decline in international oil prices, are acting as a driving force for the continuation of the relief rally. While market expectations have risen, the market appears to interpret the weak July retail sales and industrial production in China and the weak August Empire State Manufacturing Index in the U.S. as positive factors indicating a slowdown in demand-side inflationary pressures.

The fact that the Nasdaq, which has risen more than 20% from its low, is being talked about as entering a new bull market shows that market sentiment has improved significantly. However, after the recent sharp rebound, as short-term level pressures gradually increase and profit-taking emerges, the market's upper limit may be constrained. It is judged that expanding stock holdings through phased buying rather than aggressive weight increases is appropriate.