[Good Morning Stock Market] "Political Uncertainty Remains After Yoon Impeachment Rejection... Short-Term Volatility Up"

Following the rejection of the impeachment vote against President Yoon Suk-yeol on the weekend of the 7th, the domestic stock market is expected to exhibit high volatility. Amid ongoing political uncertainty, concerns have arisen over further outflows of foreign capital.

Last week, the three major indices of the U.S. New York stock market closed mixed. On the 6th (local time), the Dow Jones Industrial Average fell 0.28% from the previous close to 44,642.52. The S&P 500 rose 0.25%, and the Nasdaq Composite increased by 0.81%, with both the Nasdaq and S&P 500 reaching record highs.

By individual stocks, Apple and Nvidia declined, while Microsoft (MS) and Alphabet rose. Amazon and Meta jumped more than 2%. Tesla gained over 5% amid ongoing expectations that Elon Musk would benefit from the next administration. Broadcom rose 5%, Adobe 2%, and Arm also increased by more than 2%, with AI and semiconductor-related stocks advancing.

Last week, the domestic stock market closed lower due to amplified political uncertainty following the declaration and subsequent lifting of martial law. The KOSPI ended the day at 2,428.16, down 13.69 points (0.56%) from the previous close. It fell as low as 2,397.73, breaking below the 2,400 level. The KOSDAQ also closed down 1.43% at 661.33, having dropped to 644.39 during the morning session, losing the 650 level. This is the lowest level in the past year and the lowest since October 2022.

Global investment banks (IBs) have issued negative assessments, highlighting the political uncertainty triggered by President Yoon amid the launch of the Trump 2.0 administration and sluggish exports. Goldman Sachs, Morgan Stanley, and CLSA have released reports emphasizing the political risks.

On the 9th, the domestic stock market is expected to show weakness due to political uncertainty as the impeachment vote remains unresolved with the absence of People Power Party lawmakers. The Democratic Party plans to push for impeachment votes every Saturday, starting from the 14th. Kang Yoo-jung, the party’s floor spokesperson, told reporters after a party meeting at the National Assembly, "The push for President Yoon’s impeachment will continue on a 'Thursday and Saturday' schedule."

KB Securities researchers Kim Ji-won and Lim Jeong-eun stated, "With the failure to establish a vote on the impeachment motion, political uncertainty is prolonged, and we must prepare for the possibility of increased short-term volatility in the stock and foreign exchange markets." They added, "Valuations are at low levels, but it is necessary to monitor foreign capital flows and exchange rate trends, and attention is on whether the ongoing net buying by pension funds will provide downside support."

The two researchers also noted, "This week, inflation data from China and the U.S. and the European Central Bank (ECB) monetary policy meeting are scheduled. With the U.S. Federal Reserve (Fed) entering a blackout period, the results of these indicators should be closely watched."