[Good Morning Stock Market] KOSPI Faces Growing Concerns from US Trump Issues... Also Eyeing China Developments

On the 8th, the KOSPI is expected to start the day carrying both the easing of uncertainty following the election of U.S. President Donald Trump and the domestic industry’s burden due to the launch of the 'Trump 2.0' administration. President Trump's inclination toward an America-first policy is expected to act as a burden factor for the domestic semiconductor sector and others for the time being. There are calls for tailored strategies focusing on Trump policy beneficiaries and those benefiting from China's economic stimulus measures.

On the 7th (local time), the U.S. stock market in New York saw the S&P 500 and Nasdaq indices hit all-time highs once again. Along with the 'Trump rally,' the Federal Reserve's (Fed) interest rate cut stimulated investor sentiment. On that day, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 43,729.34, down 0.59 points (less than 0.1%) from the previous trading day. The large-cap S&P 500 index rose 44.06 points (0.74%) to 5,973.1, and the tech-heavy Nasdaq index increased by 285.99 points (1.51%) to 19,269.46, each setting new all-time highs once again.

The rise was led by technology stocks. AI leader Nvidia rose 2.24%. Apple increased by 2.14%, and Microsoft (MS) went up 1.25%. 'Trump beneficiary stocks' showed mixed results. Tesla rose 2.9% following a 14.75% jump the previous day. In contrast, Trump Media & Technology (DJT), which had risen nearly 6% the day before, dropped 22.97%, showing extreme volatility.

The previous day, the KOSPI closed at 2,564.63, up 0.04% from the day before, thanks to buying by foreigners and institutions. Meanwhile, the KOSDAQ index closed at 733.52, down 1.32% from the previous trading day. This was largely due to weakness in secondary battery stocks, including top market cap stocks EcoPro BM (-2.45%) and EcoPro (-1.87%).

Currently, the domestic stock market is busy sorting out the winners and losers among sectors and stocks benefiting from the U.S. presidential election results. Since the U.S. election event has concluded, there are also calls to focus on China-related issues.

Kim Young-hwan, a researcher at NH Investment & Securities, said, "The U.S. under Trump 2.0 will pursue a strong America-first policy," adding, "This will be a burden for Korea’s major export companies, led by semiconductors." Therefore, during the period reflecting the policy risks of the new U.S. administration, it is advised to keep in mind the decoupling between the Korean and U.S. stock markets and to focus on Trump policy beneficiaries and those benefiting from China’s economic stimulus.

Lee Jae-won, a researcher at Shinhan Investment Corp., said, "Today, the Standing Committee of the National People's Congress (NPC, equivalent to the national assembly) in China is expected to conclude by announcing additional fiscal policies," adding, "The market expects that in response to Trump’s election, Chinese authorities will introduce stronger-than-expected economic stimulus measures." He also noted, "Next week, China’s real economy indicators are scheduled to be released on the 15th, and the November 11 Singles’ Day may serve as a signal for domestic demand recovery. Although the domestic third-quarter earnings season is wrapping up, many financial companies will announce their results, raising expectations for shareholder return plans."