"Advanced Economies' Stock Markets to Continue Fluctuations in January Next Year"

There is a forecast that developed country stock markets will continue to experience a repeated fluctuation phase in January next year, following December.

Choi Bowon, a researcher at Korea Investment & Securities, stated in a report released on the 26th, "This is because a series of events that will trigger a rebound after multiple short-term corrections are scheduled consecutively," and analyzed, "Historically, January after the U.S. presidential election has shown temporary pullbacks, and early 2025 is expected to see intensified uncertainties regarding President-elect Trump and Federal Reserve policies, which will likely limit index gains."

He also viewed short-term investment attractiveness (1 month) in the order of Europe and the U.S. > Japan, and long-term investment attractiveness (12 months) in the order of the U.S. > Europe > Japan.

He advised adopting a strategy of phased buying during corrections rather than aggressive overweighting early next year. Researcher Choi said, "The expected band for the U.S. S&P 500 index in January is 5650 to 6200 points, maintaining the upper range," and analyzed, "January is expected to see spreading concerns over earnings slowdown, and the factors influencing index fluctuations will diversify, which is likely to dampen investor sentiment."

By sector, he suggested responding by considering earnings and policies. Preferred sectors include communication, industrials, IT software, and small-to-mid cap healthcare. Researcher Choi proposed, "Among recommended U.S. companies, those selected are representative growth stocks with limited policy burdens from the Trump administration and possessing competitive products/services," citing companies such as Alphabet (GOOGL), Elastic (ESTC), Salesforce (CRM), and Visa (V).

He predicted that the European stock market in January next year will be influenced more by U.S. and China policies than by earnings and macro indicators. He pointed out, "The Euro Stoxx 50 index is expected to range between 4650 and 5100 points," explaining, "January is when President-elect Trump's inauguration is scheduled, and expectations for Chinese policies are likely to rise."

He viewed that the Euro Stoxx 50 index would be more suitable for short-term trading rather than mid-to-long-term investment. He said, "Relatively, I prefer the Euro Stoxx 600 index," adding, "It has a higher country weighting that can respond even if the U.S. slows down the pace of interest rate cuts, and the earnings of large companies are better than those of representative Eurozone companies."

In the case of Japan, he said that a strategy responding to sector rotation rather than the overall index would be effective in January. He predicted, "Investment ideas will include equipment companies benefiting from U.S. policies, financial stocks benefiting from Japan’s policy rate hikes, and representative dividend stocks such as pharmaceutical/biotech firms."