[Second Half Market Outlook] US Stock Market Leads... Caution on Election Volatility

U.S. Stock Market Rally Expected to Continue in Second Half
New Opportunities Anticipated in Emerging Markets
Biggest Variable in Second Half: U.S. Presidential Election... Volatility Inevitable Before and After Election

Former U.S. President Donald Trump (left) and U.S. President Joe Biden (right)

"The United States will continue to lead the global stock market in the second half of the year, following the first half."

On the 17th, Asia Economy conducted a survey on the 'Stock Market Outlook for the Second Half of This Year' targeting heads of research centers at major domestic securities firms. The majority of experts emphasized the need to continuously invest in the 'United States' in the second half of this year. In addition, opinions suggested that there will be opportunities in emerging markets such as Korea, Taiwan, and India.

US Stock Market Rally to Continue in the Second Half... Diversified Investment in Emerging Markets Also Needed

Experts forecast that the United States, which led the global stock market in the first half, will continue its rally centered on artificial intelligence (AI) and semiconductors in the second half. Kim Young-il, Head of Research Center at Daishin Securities, said, "The US Federal Reserve (Fed) is adjusting the pace of quantitative tightening, improving liquidity conditions, and the earnings of companies within the S&P 500 are likely to increase each quarter." He added, "In particular, due to the rapid growth of the AI industry, the demand for high-bandwidth memory (HBM) is surging, which will lead the global semiconductor market to enter another upward phase in the second half." He also noted, "The upcoming releases of Chat GPT-5 and SORA will exert upward pressure."

Oh Tae-dong, Head of Research Center at NH Investment & Securities, also said, "The US will continue a robust economic recovery compared to other advanced countries due to productivity improvements and human capital investments." He added, "With effective earnings growth, preference for risk assets will increase. Since the dollar strength reflecting fundamentals is expected to continue for some time, we recommend a portfolio centered on US stocks."

Some securities firms predicted new opportunities in emerging market stocks. Kim Seung-hyun, Head of Research Center at Yuanta Securities, said, "If the dollar strength eases, the attractiveness of emerging market stocks could improve compared to advanced countries." He expected, "In the first half, the Korean stock market underperformed the global average and is sensitive to exchange rate changes, so it is likely to outperform in relative returns."

Additionally, Ko Tae-bong, Head of Research Center at Hi Investment & Securities, highlighted undervalued value stocks in Europe and China, while Lee Seung-hoon, Head of Research Center at IBK Investment & Securities, emphasized the Indian stock market, which could sustain structural growth as election uncertainties are resolved.

Caution on Volatility Ahead of US Presidential Election... "Leading Stocks May Be Reshuffled"

The securities industry identified the 'US presidential election' as an unavoidable variable when forecasting the stock market for the second half. It is expected that uncertainty and policy expectations will coexist around the election, causing significant volatility. In particular, sectors benefiting will vary depending on the policy orientations of former President Donald Trump and President Joe Biden.

Yoo Jong-woo, Head of Research Center at Korea Investment & Securities, said, "Stock market volatility will increase just before the US presidential election due to uncertainty about future policies," adding, "A short-term correction is likely to occur in the third quarter." He further predicted, "After the election in November, leading stocks will be reshuffled according to the policy direction of the winning candidate."

There was a prevailing opinion that a Trump victory would negatively impact the stock market. Lee Jong-hyung, Head of Research Center at Kiwoom Securities, said, "If former President Trump becomes president again, uncertainty related to trade and monetary policies will increase, so the stock market trend is likely to be negative in the short term after the election." Park Hee-chan, Head of Research Center at Mirae Asset Securities, also pointed out, "If Trump is re-elected, trade disputes may intensify and a strong dollar phenomenon may occur simultaneously, increasing stock market volatility."

Meanwhile, some analyses suggest that the expected correction around the US presidential election could be a buying opportunity. Oh said, "This year's US presidential election has a small gap in support rates between candidates, so stock market volatility due to uncertainty is likely to increase." However, he advised, "Considering that the stock market has rebounded after past US elections and that both candidates' pledges share the goal of US economic recovery, it is necessary to keep in mind the possibility of a stock market rebound after the election."