[Market Focus] "Rate Cut Expectations"... Securities Stocks Rally Together

On the morning of the 25th, securities stocks are showing strong performance in early trading.

As of 10:11 a.m. on this day, Hanwha Investment & Securities is trading at 5,820 won, up 400 won (7.38%) from the previous trading day.

At the same time, other securities stocks such as Bookook Securities (5.57%), Mirae Asset Securities (4.44%), Korea Financial Group (4.17%), Kiwoom Securities (4.17%), Daishin Securities (3.43%), and Shinyoung Securities (3.06%) are also showing strong gains.

This is interpreted as a result of Federal Reserve Chair Jerome Powell's speech at Jackson Hole on August 22 (local time), in which he made more dovish (favoring monetary easing) remarks than expected, suggesting the possibility of a rate cut. As a result, the likelihood of a rate cut in September has increased, and expectations of capital inflows into the stock market are rising, leading to gains in securities stocks.

Chair Powell stated, "Unemployment and other labor market indicators remain stable," adding, "We are now able to proceed cautiously as we consider changes to our policy stance." He continued, "With policy in restrictive territory, the balance of our baseline outlook and evolving risks could prompt us to adjust our policy stance."

While it is common for interest rates to be lowered to stimulate the economy during a recession, they can also be cut preemptively to guard against the risk of a downturn even when economic indicators are strong. In the former case, an economic recession negatively affects stock prices, but in the latter, a rate cut injects liquidity into the stock market, serving as a positive factor.