On the 13th (local time), there was speculation that the shooting incident involving former U.S. President Trump could increase preference for safe-haven assets. There were also opinions that the KOSPI might undergo a short-term correction this week due to the safe-haven asset preference sentiment.
Kim Dae-jun, a researcher at Korea Investment & Securities, stated in a report on the 15th, "Since the incident (the shooting of former President Trump) occurred over the weekend, the Korean market will open without seeing changes in U.S. price variables," adding, "However, we can anticipate the possible trend based on the results observed immediately after the June 27th debate."
Researcher Kim continued, "At that time, as Trump's chances of winning increased, U.S. interest rates rose, and growth stocks underperformed value stocks. Small and mid-cap stocks showed better returns than large caps. Among sectors, industries aligned with Republican policy values such as energy, finance, and industrials performed well," he explained.
During the first U.S. presidential debate, the Korean market was open. At that time, Korean interest rates fell, but stocks with high price-to-book ratios (PBR) underperformed amid expectations that U.S. interest rates could rise. Conversely, export stocks with favorable earnings estimates, such as defense and hardware, saw improved returns. Researcher Kim interpreted this as "the Korean stock market preemptively reflecting changes in the U.S. market due to market synchronization."
He expects the market to show similar movements this time as well. The difference, he noted, is that the special nature of the presidential candidate being attacked could increase preference for safe-haven assets.
Accordingly, Researcher Kim forecasted, "The KOSPI recently rose rapidly toward 2,900 points, but this trend is likely to break this week," adding, "With valuation pressures, the KOSPI will be exposed to short-term correction pressure."
He also anticipated that buying interest could concentrate on defense, pharmaceuticals, energy, and nuclear power sectors, which benefit from Trump. Researcher Kim said, "Although not classified as U.S. presidential election beneficiaries, industries with upwardly revised earnings forecasts during the earnings season are also expected to record favorable performance," but cautioned, "However, sectors unrelated to Trump’s policies, notably renewable energy, require careful selection."
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