[Good Morning Stock Market] Secondary Battery Volatility Concerns... KOSPI Expected to Start Lower

On the 28th, the KOSPI is expected to start lower due to the impact of profit-taking selling in the US stock market.

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On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 35,282.72, down 237.40 points (0.67%) from the previous session. The Standard & Poor's (S&P) 500 index fell 29.34 points (0.64%) to 4,537.41, and the Nasdaq index dropped 77.17 points (0.55%) to 14,050.11.

The New York stock market started higher as confidence in the economy was boosted by the US GDP growth rate for the second quarter. Additionally, comments by ECB President Christine Lagarde suggesting a moderate monetary policy at the European Central Bank (ECB) meeting were also analyzed as a factor supporting the rise.

However, some profit-taking desires increased, leading to a flood of selling, and later in the session, the announcement that the Bank of Japan (BOJ) would discuss yield curve control adjustments with a hawkish tone caused the gains to be surrendered, ultimately turning the market lower.

By sector, the semiconductor industry showed an upward trend. Lam Research surged over 9% due to better-than-expected earnings and guidance, and Applied Materials (AMAT) also rose alongside. Micron also increased by over 5%, leading the Philadelphia Semiconductor Index to rise 1.86%.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) fell 1.79%, and the MSCI Emerging Markets Index ETF declined 1.23%. Eurex KOSPI 200 futures dropped 0.52%. Considering this, the KOSPI is expected to start down around 0.5% on the day.

Seosangyoung, a researcher at Mirae Asset Securities, pointed out, "Although the New York stock market rose supported by the Federal Reserve (Fed) and the ECB's moderate monetary policies, the emergence of profit-taking selling due to concerns over the hawkish BOJ is a burden on the domestic stock market. Also, the possibility of increased volatility centered on the secondary battery sector following the previous day is another concern."

However, he added, "The rise in the Philadelphia Semiconductor Index and after-hours gains by Intel and KLA on solid earnings are positive signs. Changes are expected after the BOJ monetary policy results, and the supply-demand centered on the secondary battery sector is a factor for increased volatility," he analyzed.

Han Ji-young, a researcher at Kiwoom Securities, explained, "At Samsung Electronics' earnings conference call, mentions of inventory reduction and additional cuts centered on NAND, along with positive outlooks on HBM in SK Hynix's earnings, strengthened expectations that the semiconductor industry has passed its bottom. This led to sharp rises in related small and medium-sized parts and materials companies such as EO Technics (27.1%) and ISC (16.7%), driving the index."

Han Ji-young further stated, "On the other hand, the shipbuilding sector, including Hyundai Mipo Dockyard (-6.7%) and HD Hyundai Heavy Industries (-5.8%), which did not improve profits faster than market expectations, saw profit-taking selling. As this indicates, after the abnormal overheating subsides, the focus will ultimately shift to earnings. Considering that supply-demand has been lacking in sectors such as aviation, leisure, cosmetics related to China's reopening, as well as service and pharmaceutical biotech sectors, there is room for supply-demand to diversify. Therefore, it is necessary to continuously pay attention to undervalued sectors."