[MarketING] Growing Caution Ahead of US Presidential Election... Responding Through Individual Sectors

This Week, US Presidential Election & FOMC
Market Volatility Inevitable
Respond with Individual Sectors like Beneficiary Stocks

This week, the domestic stock market is expected to be influenced by the U.S. presidential election and the Federal Open Market Committee (FOMC) results. NH Investment & Securities projected the KOSPI range for this week (November 4-8) to be between 2490 and 2610 points.

[Image source=Yonhap News]

According to the Korea Exchange on the 3rd, the KOSPI index closed at 2542.36 points, down 38.67 points (1.50%) from the previous week. During the same period, the KOSDAQ index also fell by 5.54 points (0.75%) to close at 729.05 points. In the securities market, individuals and institutions net bought 1.1136 trillion KRW and 746.3 billion KRW respectively, while foreigners net sold 1.8699 trillion KRW.

The biggest event the market is watching this week is undoubtedly the U.S. presidential election. The U.S. presidential election will be held on the 5th (local time). However, it is expected that the results may take up to two weeks to be announced. Polls in battleground states show a close race within about 1 percentage point between the two candidates, creating an atmosphere where it is uncertain who will secure victory in this election. Accordingly, market volatility is expected to increase until the results become clear.

Shin Seung-jin, a researcher at Samsung Securities, predicted, "The stock market may continue to exhibit a wait-and-see sentiment until the election results are announced." He added, "If the uncertainty surrounding the U.S. election leads to a retracement of the previously priced-in rise in the dollar and interest rates, the market could rebound. The response strategy should differ depending on the election outcome."

Jo Byung-hyun stated, "In the case of the election, if Harris wins, there could be a honeymoon rally due to a retracement in market interest rates, whereas if Trump wins, additional interest rate hikes may occur, and the range of index fluctuations may be adjusted downward." He further noted, "Especially if Trump wins, concerns about fiscal burdens as well as the ripple effects of trade and tariff policies could be additionally reflected in the short term."

Accordingly, advice has emerged to respond by focusing on individual sectors benefiting from each U.S. election candidate. Kim Young-hwan, a researcher at NH Investment & Securities, said, "Due to concerns about AI monetization, sustained high interest rates, and policy uncertainties of the new U.S. administration, stock index volatility may increase. It is necessary to focus on individual sectors related to policy issues, such as election beneficiary stocks by U.S. candidate and Chinese economic stimulus-related stocks."

Attention should also be paid to the FOMC results scheduled for the 6th (local time). Moon Nam-jung, a researcher at Daishin Securities, said, "The November FOMC will serve as a remedy to calm the aftershocks that could swirl around the U.S. election results." He added, "The Fed, which began to lose its political neutrality by cutting rates by 50 basis points (1bp=0.01 percentage point) in September, is expected to pursue further rate cuts and re-emphasize the easing of financial conditions, considering recent remarks by Fed Chair Jerome Powell."