[Good Morning Stock Market] "Focus on Chinese Economic Indicators Amid Profit-Taking Sell-Off"

[Asia Economy Reporter Kwon Jaehee] While the New York Stock Exchange was closed the previous day, European stock markets rose as the energy crisis issue disappeared due to a sharp drop in natural gas prices, bringing confidence in the economy. In particular, stock markets across Europe have continued their strong performance, rising nearly 25% since the fourth quarter, indicating overall positive investor sentiment. Additionally, news that U.S. Treasury Secretary Janet Yellen and Chinese Vice Premier Liu He are expected to meet at the Davos Forum also had a positive impact. As a result, Germany's DAX closed up 0.31%, the UK's FTSE rose 0.20%, France's CAC40 increased 0.28%, and the Euro Stoxx 50 gained 0.15%.

The strong performance of European stock markets, driven by expectations of resolving the energy crisis due to the sharp drop in natural gas prices and anticipation of a meeting between U.S. Treasury Secretary Yellen and Chinese Vice Premier Liu He, is also positive for our stock market. However, concerns about an economic downturn may arise as China's GDP growth rate, retail sales, and industrial production, scheduled to be announced at 11 a.m. Korean time, are expected to be sluggish, which could weigh on investor sentiment. Considering this, our stock market is expected to start with a slight decline and then focus on changes in the Chinese stock market following the economic data, showing a process of absorbing selling pressure.

[Image source=Reuters Yonhap News]

On the 17th, the Korean stock market is expected to start with a decline of around 0.3% and then focus on changes in the Chinese stock market following the economic data, showing a process of absorbing selling pressure.

Suh Sang-young, Head of Media Content at Mirae Asset Securities: "The Announcement of Chinese Economic Data is Key"

Our stock market continued its strong performance the previous day, supported by an improvement in U.S. consumer sentiment and a rising U.S. stock market. In particular, the improvement in foreign investor demand due to the weak dollar was also positive. Although selling pressure emerged as the Hong Kong stock market showed weakness centered on tech stocks, demand factors drove the index higher, with the KOSPI closing up 0.58% and the KOSDAQ rising 0.71%.

The strong performance of European stock markets, driven by expectations of resolving the energy crisis due to the sharp drop in natural gas prices and anticipation of a meeting between U.S. Treasury Secretary Yellen and Chinese Vice Premier Liu He, is also positive for our stock market. However, despite these favorable factors, the dollar's strength and the reversal of the financial market changes since the fourth quarter may lead to selling pressure.

China's fourth-quarter GDP growth rate, to be announced at 11 a.m. Korean time, is expected to be 1.8% year-on-year, falling short of the previous quarter's 3.9%. Retail sales are expected to decline further from a 5.9% decrease to an 8.6% decrease, and industrial production is forecasted to slow from a 2.2% increase to a 0.2% increase, indicating a slowdown in economic indicators.

While these data results could expand the Chinese government's stimulus intentions, which is positive, the market's focus on economic recession could weigh on overall investor sentiment.

Han Ji-young, Researcher at Kiwoom Securities: "Profit-taking Selling Amid Chinese Data Impact... Sideways Market"

Our stock market closed higher the previous day, supported by simultaneous net buying by foreigners and institutions, improvement in U.S. consumer sentiment, and a decline in expected inflation.

Today, amid profit-taking selling following recent short-term gains, the market is expected to be influenced by the Chinese economic data to be announced during the day, resulting in a sideways trading range.

Recently, the domestic stock market has seen a rotation among sectors, but the price movements are being driven by individual stock-specific factors without common top-down characteristics among the leading sectors on any given day. The strong performance of banking, chemical, and internet stocks the previous day can be seen in this context.

Considering this, today as well, the upside for large-cap stocks is expected to be limited, with short-term trading likely to focus on individual thematic factors such as UAE investment themes related to President Yoon Seok-yeol's state visit, China reopening themes, and robotics themes.