[Good Morning Market] Focus on People's Bank Moves... KOSPI Expected to Start Higher

The domestic stock market is expected to start higher on the 21st. Although the U.S. stock market closed mixed in a narrow range, a rebound buying trend reduced the losses or turned the market upward. The possibility of the People's Bank of China implementing strong stimulus measures is also a reassuring factor. The KOSPI is expected to continue digesting sell-off pressure while paying close attention to changes in the Chinese stock market.

In the last trading session of last week, the U.S. Dow Jones Industrial Average closed at 34,474.83, down 290.91 points (0.84%) from the previous session. The large-cap-focused S&P 500 index fell 33.97 points (0.77%) to 4,370.36, and the tech-heavy Nasdaq index dropped 157.70 points (1.17%) to 13,316.93.

The Korean stock market is likely to continue a stock-specific market where the ups and downs of individual stocks are influenced by various factors such as China, the economy, the dollar, and interest rates, which affect future corporate earnings. In particular, changes are expected to occur mainly in groups of stocks that have shown clear earnings improvements but have not experienced significant price increases.

Above all, the actions of the People's Bank of China are expected to be an important variable. Last Friday, the Korean stock market underperformed as investor sentiment weakened due to the continued weakness in the tech-heavy Nasdaq in the U.S. market. Additionally, concerns over an economic downturn caused by instability in China's real estate sector led to continued foreign selling, which also contributed to the decline.

However, it is favorable that the possibility of the Chinese real estate issue expanding into a systemic risk is limited. The People's Bank of China is expected to cut the Medium-term Lending Facility (MLF) rate, and there is a high possibility of a reduction in the Loan Prime Rate (LPR) to be announced today (21st). Recently, some stimulus measures such as extensions of real estate loans have been discussed or announced. This could alleviate concerns about the slowdown in the Chinese economy and be positive for the Korean stock market.

Also, in the U.S. market, the Philadelphia Semiconductor Index initially fell more than 1% early in the session but ended up closing 0.48% higher due to rebound buying. Semiconductor-related stocks in the Korean market are also expected to show solid performance. Considering that the rebound was centered on semiconductor equipment sectors, attention should be paid to small and mid-cap semiconductor stocks in the Korean market as well.

Seo Sang-young, Head of Media Content at Mirae Asset Securities, analyzed, "The Korean stock market is expected to start with a rise of around 0.3%, then focus on the actions of the People's Bank of China and the resulting changes in the Chinese stock market while continuing to digest sell-off pressure."