Kiwoom Securities "Domestic Stock Market Expected to Remain in a Box Range Due to Trump's Election"

Presented 'AI, Defense Industry, and Finance' as Target Sectors

Kiwoom Securities forecasted that the domestic stock market is expected to show a box range movement due to related uncertainties until the actual policy outlines become clear, following the election of former President Donald Trump in the 2024 U.S. presidential election.

Han Ji-young, a researcher at Kiwoom Securities, stated in the report titled "Analysis of the Impact of the U.S. Presidential Election on Financial Markets" that "HBM, AI-related stocks such as power equipment, defense stocks, and financial stocks are suggested as sectors to focus on."

In the federal congressional elections held alongside the presidential election, the Republican Party secured 52 out of 100 seats in the Senate, gaining majority status. As a result, the Republicans will become the majority party in the Senate starting January next year. This means that the realization of promises previously planned by Trump, such as the repeal or reduction of the Inflation Reduction Act (IRA), amendments to the Medicare law, corporate tax cuts, and withdrawal from the Paris Climate Agreement, has become possible through bill proposals and approvals.

Researcher Han analyzed, "Fundamentally, Trump is considered an unpredictable figure," adding, "The re-launch of Trump's second term could cause uncertainties deviating from the Democratic Party's previous policy trajectory, which may lead to increased short-term volatility."

Kiwoom Securities identified three core keywords of Trump's policies: tax cuts, tariffs, and deregulation. From the stock market perspective, sensitivity to whether the Trump administration will pursue universal tariffs is expected to increase.

Han explained, "For the domestic stock market, which has a high proportion of export companies, the implementation of universal tariffs is inevitably damaging," diagnosing that "notably, the possible reduction of the Inflation Reduction Act (IRA) and the CHIPS Act, which Trump may pursue, could constrain investment sentiment in domestic semiconductor, secondary battery, automobile, and renewable energy sectors."

On the other hand, sectors such as machinery (infrastructure investment trend), defense (geopolitical conflict expansion and increased defense demand), bio (biosecurity law, drug price reduction), and shipbuilding (expansion of fossil fuel investment) are expected to reflect the anticipation of a Trump trade.

Researcher Han added, "Since related concerns may be reflected in the short term after Trump's election, funds may flow into sectors with relatively less uncertainty rather than those highly sensitive to policy."