[Click eStock] "January Volatility Response... US Index & Growth Sectors, Split Buying of Zhong Index"

NH Investment & Securities stated on the 26th, "With the inauguration of President Trump on January 20th, a series of events such as executive orders, the FOMC, the State of the Union address, and policy drafts are pending," adding, "Since strong policies have been announced, these will act as factors of market volatility." They anticipated that CES and the earnings season will serve as opportunities to confirm momentum and fundamentals.

Due to increased stock market volatility caused by external variables, the U.S. stock market, which had experienced a steep rise, and the Chinese stock market, which will be affected by the policies of the second Trump administration, are expected to be negatively impacted.

The Investment Strategy Department of NH Investment & Securities Research Headquarters advised, "For the stock markets of the two countries, if sufficient corrections occur, the U.S. market should respond with phased purchases focusing on indices and growth sectors, while China should do so focusing on indices, timing the purchases accordingly."

Recently, stock markets in the U.S., Germany, and other countries have been slowing down after hitting new highs. It is now time to determine investment strategies based on future stock price directions. Policy uncertainties may be highlighted in the U.S., and Germany continues to face strong pressures from economic sluggishness.

The U.S. stock market faces a coexistence of expectations and uncertainties ahead of the launch of Trump’s second term. First, uncertainties regarding trade conflicts and monetary policy are prominent. Short-term interest rate volatility is likely to increase. On the other hand, there is also optimism about economic improvement due to the resumption of deferred investments and tax cut policies. Therefore, despite valuation pressures, a gradual upward trend in stock prices is expected given the improvement in economic fundamentals.

The recent rebound in Eurozone stock prices is influenced by expectations of ECB policies and improved external demand. However, the ECB’s accommodative stance has already been sufficiently reflected in financial markets, and the recovery of external demand remains uncertain. Moreover, since policymakers are implementing fiscal tightening, it is difficult to expect further outperformance of Eurozone stock prices.

When comparing capital investment and labor productivity, which determine long-term economic direction, the Eurozone remains stagnant while the U.S. continues to show improvement. Mid- to short-term momentum also favors the U.S. over the Eurozone.

Considering this, the upward momentum of the U.S. stock market within developed countries is expected to remain robust. However, political and policy uncertainties may be highlighted following the inauguration of the new U.S. administration. If stock price volatility increases due to this, it could be used as a buying opportunity in the U.S. stock market. Additionally, the stock prices of large-cap tech companies with relatively strong fundamentals in the U.S. market are expected to maintain a solid trend. Therefore, it is necessary to approach large growth stocks from a long-term perspective during price corrections. Attention should also be paid to sectors with improving earnings such as finance and consumer goods.

In China, policy effects are expected to become partially visible. The Chinese manufacturing PMI has maintained an expansionary trend for two consecutive months. This is due to production expansion driven by improved corporate cash flow and preemptive export acceleration in response to the announced tariff increases by Trump.

However, a disappointing factor is the shipment prices. The turning point for PPI and corporate profits to become positive may be delayed. China is expected to continue efforts toward self-reliance in manufacturing products, including high-tech products, next year.

Until specific macro targets are presented at the National People's Congress in March next year, expectations for coordinated monetary and fiscal policies remain valid. At least until the first quarter of 2025, the stock market is expected to rise mainly driven by growth stocks (such as semiconductors, secondary batteries, AI, etc.). If the effects of government stimulus policies fall short of market expectations, defensive high-dividend stocks are expected to be relatively promising from the second quarter of 2025.

President-elect Trump mentioned imposing additional tariffs of 10% on Chinese products and 25% on products from Mexico and Canada. As a result, China’s exports are expected to decrease by 2 percentage points annually. In response to the tariff impositions by the second Trump administration, the Chinese government is expected to not only impose retaliatory tariffs but also weaponize strategic materials and strengthen sanctions against U.S. companies.