[Good Morning Stock Market] KOSPI Expected to Start Higher... Volatility Concerns Ahead of Major Shareholder Requirement Easing Announcement

[Image source=Yonhap News]

On the 20th, the KOSPI index is expected to start higher, supported by the strong performance of the New York stock market and the decline in the won-dollar exchange rate. However, volatility is anticipated to increase as caution grows ahead of the announcement on the relaxation of major shareholder requirements during the trading session.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 37,557.92, up 251.90 points (0.68%) from the previous session. The Standard & Poor's (S&P) 500 index rose 27.81 points (0.59%) to 4,768.37, and the Nasdaq index gained 98.02 points (0.66%) to close at 15,003.22.

The New York stock market closed higher, influenced by expectations of a soft landing for the economy and remarks from Federal Reserve (Fed) officials about the possibility of interest rate cuts. The number of U.S. housing starts in November significantly exceeded market expectations, boosting hopes for a housing market recovery. Additionally, Fed officials Thomas Barkin and Raphael Bostic, who spoke that day, appeared to agree on the "major premise" of rate cuts next year, which helped the market's relief rally.

Expectations for dovish policies from major central banks also pushed the stock market higher. The Bank of Japan (BOJ), which held its final monetary policy meeting of the year in the Asian market, maintained its ultra-loose monetary policy, supporting the stock rally.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) rose 1.12%. The MSCI Emerging Markets ETF increased by 0.85%. Considering that Eurex night futures also rose 0.48%, the KOSPI index is expected to start higher on the day.

Ji-hyun Kim, a researcher at Kiwoom Securities, said, "With events such as the WEMIX event, Naver's new streaming platform beta test, and the January JP Morgan conference, some individual stocks will continue to perform, and the KOSDAQ is expected to show a stronger trend." She added, "On the other hand, the gains in semiconductor materials and parts stocks, including SK Hynix, are expected to slow down relatively."

She also forecasted that the KOSPI's upward momentum would weaken compared to last week, when foreign investors bought 1.4 trillion won following the sharp drop in the won-dollar exchange rate and interest rates after the U.S. Federal Open Market Committee (FOMC) meeting, leading to outperformance of large-cap KOSPI stocks. The KOSDAQ's further rise will depend on the details of the revised major shareholder capital gains tax requirements to be announced that day.

Researcher Kim explained, "After the Ministry of Strategy and Finance hearing at the National Assembly yesterday, the possibility of relaxing major shareholder requirements has increased. However, the deadline to avoid the major shareholder capital gains tax is two trading days before the last trading day in December, which is the 26th. Even if the relaxation of major shareholder requirements is decided on that day, the revised standards must be submitted to the Cabinet meeting on the 26th to apply the raised major shareholder criteria within this year." She added, "If the result falls short of market expectations, a significant pullback may occur. Since this is a supply-demand noise separate from fundamentals, it is possible to respond with low-price buying aiming for a rebound after the year-end."