[Good Morning Market] KOSPI Nears 2,800... Will the "Honeymoon Rally" Continue?

"Continued Foreign Inflows Needed for Further Gains"

On June 5, the domestic stock market is expected to open slightly higher, absorbing some profit-taking after the sharp gains of the previous day.

Earlier, on June 4 (local time), the New York stock market ended mixed as private employment data and a slowdown in the services sector were confirmed. The Dow Jones Industrial Average, centered on blue-chip stocks, closed at 42,427.74, down 91.9 points (0.22%) from the previous session. The S&P 500, focused on large-cap stocks, ended at 5,970.81, up 0.44 points (0.01%), while the tech-heavy Nasdaq finished at 19,460.49, up 61.53 points (0.32%).

Reuters Yonhap News

Kim Seokhwan, a researcher at Mirae Asset Securities, commented, "Signs of an economic slowdown in the United States continued to exert a negative influence on the market," adding, "President Donald Trump hinted at difficulties in negotiations with President Xi Jinping, which increased uncertainty over US-China trade talks."

Although some indicators are showing signs of an economic slowdown in the United States, the impact on the domestic stock market is expected to be limited. Kim Jiwon, a researcher at KB Securities, said, "The KOSPI entered a technical bull market after rising more than 20% since hitting its low in early April," and added, "With the new government taking office under a ruling party majority, expectations for strong policy momentum are rising, and the continued strength of policy-beneficiary leading stocks is anticipated."

However, experts generally agree that continued foreign inflows are necessary for further gains. On the previous day, foreign investors made net purchases of about 1 trillion won in the KOSPI market, marking the first time since August 2024 that this level has been reached.

Lee Sunghoon, a researcher at Kiwoom Securities, stated, "Today, the domestic stock market is expected to start slightly higher, as foreign inflows are likely to offset some profit-taking after the previous day's sharp gains," and added, "Given expectations for an extra budget of over 30 trillion won, stock market activation policies, amendments to the Commercial Act following the launch of the new government, and the stabilization of the won-dollar exchange rate, the trend of net foreign buying in the domestic stock market is likely to continue."

The ruling Democratic Party's strong intention to reintroduce amendments to the Commercial Act is also expected to serve as a momentum for the domestic stock market. Lee further explained, "With Lee Jaemyung's inauguration as president, the political landscape has shifted to a ruling party majority, enabling faster policy implementation," and added, "Policy-beneficiary themes such as holding companies, securities, and banks with low price-to-book ratios (PBR) may see some short-term profit-taking due to their recent rapid gains, but a second rally could occur as actual policy implementation progresses." In addition, news of the final nuclear power plant contract being signed between Korea Hydro & Nuclear Power and the Czech Republic is also expected to serve as a positive momentum for domestic nuclear power stocks.