The Surge in Interest Rates Is Driven by a Robust US Economy
In the Summer of 2023, Inflation Was the Main Driver of Rate Hikes
Yuanta Securities on the 14th predicted that the KOSPI's decline this year would not be as significant as in the past, despite the sharp rise in the 10-year US Treasury yield. The surge in US Treasury yields reflects the robustness of the US economy more clearly than concerns about inflation.
Kang Daeseok, a researcher at Yuanta Securities, stated, "Unlike the summer of 2023, the recent rise in US Treasury yields is expected to result in a limited decline in the stock index (KOSPI). Buying during market corrections remains a valid strategy."
One of the most important factors is price. Kang explained, "In July 2023, the KOSPI index recovered to the 2600-point level for the first time in 13 months, reaching a 52-week high, and the US market showed a similar trend. Currently, the domestic stock market has already fallen about 13% from its peak."
The sectors that outperformed the market returns in the summer of 2023 are understood in the same context. Kang evaluated, "Except for financial sectors like insurance that benefit from rising interest rates, telecommunications and consumer goods, which had already recorded double-digit declines from their peaks, were strong. However, now, secondary batteries, steel, semiconductors, and IT hardware are among the sectors with the largest declines."
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