[Market ING] "KOSPI Ahead of Trump's Inauguration, Rotation Market Expected"

Focus on JP Morgan Conference from January 13 to 16
Market Attention on... U.S. December CPI

This week (13th-17th), the domestic stock market is expected to continue a rotation market rather than a rise in leading stocks ahead of President Trump's inauguration. Securities firms particularly advised paying attention to pharmaceutical and bio stocks participating in the JP Morgan Healthcare Conference held from the 13th to the 16th.

Yonhap News

According to the Korea Exchange on the 12th, last week (January 6-10), the KOSPI recorded 2,515.78, up 73.86 points (3.02%) from the previous week. In the securities market, foreign investors net purchased 1.4672 trillion KRW, while individual and institutional investors net sold 1.1183 trillion KRW and 768 billion KRW, respectively.

NH Investment & Securities researcher Na Jeong-hwan said, "Since the beginning of this year, foreign investors have been gradually filling the sector weights they had vacated," adding, "Although foreign ownership decreased over the past six months, it is necessary to pay attention to sectors where ownership is recently increasing."

The market is focusing on the U.S. December Consumer Price Index (CPI) scheduled for the 15th (local time). The consensus is a 0.3% increase compared to the previous month.

Lee Kyung-min, a researcher at Daishin Securities, explained, "Last December's CPI may reflect temporary factors such as increased freight costs due to strikes and rising food prices caused by avian influenza," but added, "The inflation trend is likely to peak with this announcement."

NH Investment & Securities projected the KOSPI range for this week to be between 2,440 and 2,570. Factors supporting the stock market rise include low attractiveness prices by sector, the JP Morgan Healthcare Conference, and consumption stimulation policies. On the downside, the possibility of downward revisions to this year's earnings forecasts following the Q4 corporate earnings announcements and Trump's radical tariff policies are expected to act as negative factors.

NH Investment & Securities researcher Na Jeong-hwan said, "Ahead of uncertainties such as Trump's inauguration, the Korean stock market is expected to continue a rapid rotation market rather than a rise in leading stocks," adding, "It is also necessary to pay attention to pharmaceutical and bio stocks participating in the JP Morgan Healthcare Conference."

Attention should also be paid to the consumption and tourism sectors ahead of the Korean Lunar New Year holiday (January 25-30) and the Chinese Spring Festival holiday (January 28 - February 4). Researcher Na said, "Although domestic demand is sluggish due to high inflation, expectations for stocks in the travel and distribution sectors that have fallen significantly may expand," adding, "Also, considering the Chinese Spring Festival holiday, it is necessary to view food and beverage and cosmetics sectors related to Chinese consumption from a buying perspective for the time being."

Shinhan Investment Corp. researcher Kang Jin-hyuk said, "Amid the recent rebound in the semiconductor sector, TSMC's earnings announcement on the 15th is expected to be a turning point for the U.S. stock market rally to resume," adding, "Recently, with Trump's love call for cooperation in the shipbuilding industry, engine and equipment stocks are also expected to benefit."

There was also an opinion that the KOSPI rebound seen at the beginning of the year is not a trend rise. BNK Investment & Securities researcher Kim Seong-no said, "With the coincident economic index cyclical component entering the recession zone and earnings downgrades expected mainly in semiconductors, a trend rise will require time," adding, "The basis for viewing it as an autonomous rebound includes the KOSPI 200 12-month PER rebounding from -2 sigma, and major sector valuations rebounding from historically low levels."