[Click eStock] "KOSPI Rebound Momentum... Bond Yields and Dollar Stability Are Key"

The KOSPI, which had fallen below the 2400 level during the session, recovered above 2500 after 8 trading days. Kyungmin Lee, a researcher at Daishin Securities, analyzed, "The excessive anxiety has calmed down, and the rebound of the sharply fallen semiconductor and secondary battery sectors acted as the driving force for normalization."

Last week's weekly return ranked the highest among major global countries for the KOSPI. It was judged to be an autonomous rebound due to an excessive short-term decline. This week, the key will be whether bond yields and the dollar pass their peaks and stabilize downward.

Researcher Lee said, "We need to pay attention to the November FOMC minutes this week," adding, "It could be a turning point for the global financial market, which has already priced in a hawkish consensus of one to two rate cuts in 2025." He also assessed, "There is a high possibility of dovish comments and a reaffirmation of the Fed's stance, and the market is likely to react more sensitively to this."

The fact that the second Trump administration's cabinet appointments have been finalized is also a checkpoint. As the uncertainties and anxieties that had stimulated dollar strength and rising bond yields have passed their peak, bond yields and the dollar are expected to stabilize downward. In this case, growth stocks such as secondary batteries, pharmaceuticals & bio, and internet sectors, which have increased their market capitalization weight due to weakening leadership of semiconductors and Samsung Electronics, could lead the KOSPI rebound.

From a supply and demand perspective, the downward stabilization of the won-dollar exchange rate (passing the peak of won weakness) combined with seasonality (dividend drop issues in November and December) may lead to foreign investors buying spot and futures, and institutional program buying inflows.

This week, the KOSPI is at a critical turning point to see whether it can continue a resilient rebound beyond short-term undershooting and normalization. Breaking through and settling in the 2550?2580 point range is important. Considering the KOSPI index range and valuation levels that have already priced in the worst-case scenario feared by the market, there is a view that it is necessary to maintain and strengthen a strategy that uses short-term fluctuations as an opportunity to increase weighting.

Despite favorable economic indicators and a rebound in inflation, concerns over persistent Trump risks have kept U.S. bond yields and the dollar at high levels, with the 10-year U.S. Treasury yield exceeding 4.4% and the 2-year yield surpassing 4.3%. The dollar index has even exceeded 107 points due to geopolitical risk concerns and weak European economic indicators.

Continued Upward Pressure on Bond Yields and the Dollar

The issue lies in expectations for rate cuts in 2025. The implied rate for December 2025 on the Fed's dot plot is 3.4%, exceeding it by more than 52 basis points. A consensus is forming for two or fewer rate cuts within 2025. This reflects a shift from normalization of monetary policy expectations to concerns over tight monetary policy in 2025. In particular, uncertainty over the policies of the second Trump administration is intensifying during the appointment process of key figures.

Continued Relative Weakness of the KOSPI, but Signs of Change Emerging

Since August, the KOSPI has shown weakness and continued relative underperformance compared to global stock markets. Returns in October and November were also at the lower end, at -1.43% and -2.15%, respectively. However, after passing the November low, the KOSPI's rebound has been characterized by a differentiated rally compared to global markets, led by the rebound of Samsung Electronics and heavily oversold stocks. Looking at the recovery above the 2500 level since the KOSPI low on the 15th, sectors such as secondary batteries, semiconductors, Samsung Electronics, banks, automobiles, insurance, software, shipbuilding, and chemicals have led the rebound. These are oversold growth stocks and representative sectors that had been underperforming. Foreign investors have also increased their holdings mainly in oversold stocks such as software, IT home appliances, shipbuilding, and secondary batteries. Although selling pressure on semiconductor stocks like Samsung Electronics remains, changes in supply and demand patterns are being detected after the Q3 earnings season.

Strong Chinese Economic Indicators and Solid Korean Export Momentum

In China, the effects of policies in the second half of 2023 are becoming visible, and a stronger policy drive is expected in the second half of 2024. Recently, China's liquidity momentum is recovering. Real economy indicators and PMI (Purchasing Managers' Index) have exceeded expectations. The improvement and strengthening of economic momentum are expected to continue until the first half of 2025. As of the 20th, Korean exports increased by 5.8% year-on-year, maintaining solid export momentum. Semiconductors (42.5%) and ships (77.1%) showed increases. Exports to China (3.5%), Vietnam (16.3%), and the European Union (7.5%) also increased. The improvement in exports to Asia, China, and Europe was evaluated positively.