[Good Morning Market] Korean Stocks Take a Breather... "Focus on Changes in Foreign Capital Flows"

On May 16, the domestic stock market is expected to continue its consolidation phase without a clear directional trend, similar to the previous day.

Previously, the New York stock market closed mixed on May 15 (local time), marking a third consecutive day of wait-and-see sentiment, despite a slowdown in wholesale prices and retail sales growth. The Dow Jones Industrial Average, which is focused on blue-chip stocks, rose by 271.69 points (0.65%) to 42,322.75. The S&P 500 Index, centered on large-cap stocks, gained 24.35 points (0.41%) to 5,916.93. The Nasdaq Index, which is centered on technology stocks, fell by 34.49 points (0.18%) to close at 19,112.32.

Reuters Yonhap News

Lee Sunghoon, a researcher at Kiwoom Securities, stated, "The short-term rally based on optimism about US-China trade negotiations is gradually fading, and the market has now entered a phase where it is focusing on major economic indicators that can confirm the impact of tariffs." He added, "Although the effects of tariffs have not yet clearly appeared as a contraction in real economic indicators, the fact that signals of economic slowdown are gradually emerging in the latest producer price and retail sales data is a risk factor."

The previous day, the domestic stock market entered a consolidation phase due to accumulated rally fatigue, despite foreign capital inflows for seven consecutive trading days. Lee also predicted, "Today, the domestic stock market is also likely to show a lack of clear direction, with market movements centered on sectors and individual stocks that have their own momentum, similar to the previous day."

The iM Securities Research Center commented, "With the news of upward pressure on the Korean won and continued foreign capital inflows, it is important to watch whether this trend will persist." They also pointed out, "In particular, as the KOSPI has surpassed the 2,600 level, some valuation concerns have emerged, so investors should pay attention to the possibility of increased differentiation by sector."

Although the wait-and-see sentiment continues in both the US and domestic stock markets, optimism remains prevalent. Kim Byungyeon, a researcher at NH Investment & Securities, analyzed, "While the Korean stock market continues to move in tandem with the US market, expectations for expansionary fiscal policy under the new government and the prospect of a policy rate cut increase the likelihood of relative outperformance." He added, "There is a growing possibility that the market leadership will rotate from shipbuilding and defense stocks in the first half of the year to domestic demand-oriented and low price-to-book ratio (PBR) stocks, as well as artificial intelligence (AI) companies related to government policy, in the second half."