"Domestic Stock Market, Situation Allowing Short-Term Rebound Expectations"

SK Securities recently analyzed on the 31st that although the domestic stock market has been on a downward trend due to increased internal and external uncertainties, the technical indicators suggest that there is sufficient reason to expect a short-term rebound.

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Joon-ki Cho, a researcher at SK Securities, said, "Global stock markets are showing a uniformly sluggish trend," adding, "From a global perspective, amid ongoing tariff noise from U.S. President Donald Trump, quarter-end volatility and poor U.S. economic indicators have also appeared."

He added, "In the case of the domestic stock market, uncertainty related to the impeachment of President Yoon Seok-yeol continues, and from today, the resumption of domestic stock short selling has also contributed to a sense of caution."

However, SK Securities predicted that the possibility of a short-term rebound is high due to the recent sharp decline. He explained, "After the domestic market closed, additional negative factors emerged, so defensives are a comfortable choice for the time being," but also said, "Prices have plunged strongly downward, and from a technical indicator perspective, there is enough reason to expect a short-term rebound."

He continued, "According to our liquidity model, the liquidity effects from U.S. fiscal and monetary policies are expected to improve in the second quarter compared to the first quarter, so it is not a bad time to probabilistically place bets."

Regarding short selling, he predicted that short-term volatility will occur but it will move in a direction that improves supply and demand conditions. He emphasized, "Recently, trading volume in the domestic stock market has decreased significantly," and added, "If trading proceeds smoothly, the possibility of a further significant drop from the current position is low."

He explained, "The estimated operating profits for KOSPI this year and next year have been revised upward by 0.8% and 0.9%, respectively, compared to the early March lows, and on a quarterly basis, the first quarter estimates have the smallest improvement but are being revised upward evenly," adding, "In an environment where expectations have been greatly lowered, if earnings support the market, there could be significant upside."