[Good Morning Stock Market] Kospi Holds Steady Ahead of US CPI... Differentiation Among Stocks

[Asia Economy Reporter Kwon Jae-hee] On the 13th (local time), the New York stock market closed higher across the board, influenced by expectations of a slowdown in the US January Consumer Price Index (CPI) announcement, falling market interest rates, and a weaker dollar ahead of the CPI release. The Dow Jones Industrial Average rose 1.11% (386.66 points) to close at 34,245, the Standard & Poor's (S&P) 500 index increased 1.14% (46.83 points) to 4,137.29, and the tech-heavy Nasdaq index jumped 1.48% (173.67 points) to finish at 11,891.79.

Following last Friday's University of Michigan Consumer Sentiment Survey, the New York Fed's consumer expectations survey results met market expectations. Notably, the one-year ahead expected inflation, closely watched by investors, remained unchanged at 5%. Michelle Bowman, a Federal Reserve Board member who spoke that day, described the economic and inflation outlook as highly uncertain and assessed that achieving price stability is still far off. She emphasized that continuous rate hikes are appropriate to raise the federal funds rate to a sufficiently restrictive level and that this level should be maintained for some time.

Today, the domestic stock market is expected to show differentiated movements among individual stocks amid cautious sentiment ahead of external events. Additionally, with the won-dollar exchange rate rising from the early February low of the 1,210 won range to the current 1,270 won range, increasing volatility, attention to external events is necessary.

Kim Seok-hwan, Researcher at Mirae Asset Securities: "Cautious Sentiment Ahead of US CPI Announcement... Stock-Specific Market Expected"

On the 14th, the KOSPI is expected to start with a rise of around 0.4% compared to the previous trading day.

However, due to many scheduled external events, a stock-specific market is anticipated. First, the next governor candidate for the Bank of Japan (BOJ) is expected to be announced during the trading session. The foreign exchange market has already shown volatility following reports a few days ago revealing the appointment. The current leading candidate, Amamiya, the current BOJ Deputy Governor, is classified as dovish, while Ueda Kazuo, former BOJ Policy Board member, is considered hawkish, so the foreign exchange market is likely to experience volatility depending on the appointed candidate.

Also, the US January Consumer Price Index (CPI) carries significant uncertainty as it will apply updated seasonal adjustments and item weights.

[Image source=Reuters Yonhap News]

The start of the regular shareholders' meetings season, beginning with Samsung Electronics' annual general meeting, is another point to watch closely. Interest in companies' shareholder return policies is expected to increase. Especially, as global interest rate hikes became full-scale last year, financial sectors with significantly increased interest income are likely to face growing demands for dividend increases and social contributions. Last week, some financial companies accepted activist investors' demands and decided to raise dividend payout ratios. Alongside this, merger and acquisition (M&A) issues also deserve attention. HMM, which posted its best-ever performance last year, is expected to attract interest in its future sale process as its first and second largest shareholders, the Korea Development Bank (20.69%) and the Korea Ocean Business Corporation (19.96%), plan to sell their stakes.

Han Ji-young, Researcher at Kiwoom Securities: "US Stock Market's Upward Close Leads to KOSPI's Positive Start"

Yesterday, the domestic stock market closed mixed as institutions mainly engaged in profit-taking amid the burden of the rising won-dollar exchange rate and US inflation concerns. The KOSPI fell 0.69%, while the KOSDAQ rose 0.01%.

Today, the market is expected to open higher influenced by the strong US stock market, including the Nasdaq, but during the session, caution over the US January CPI is likely to cap the index's upside, resulting in a stock-specific market driven by issues such as management disputes and shareholder returns.

Meanwhile, the next BOJ governor is likely to be either Amamiya Masayoshi, the current Deputy Governor, or Professor Ueda Kazuo, and market attention is expected to focus on the outcome. This could cause price volatility centered on the yen and foreign exchange markets. Given that one of the reasons for the recent stagnation of large-cap stocks and weakening foreign net buying in the domestic market was the rising won-dollar exchange rate, market participants focusing on large caps should also pay attention to the BOJ governor appointment results.