Daishin Securities has advised that, with the long Chuseok holiday starting next week and overlapping uncertainties originating from the United States, risk management becomes crucial for the KOSPI above the 3,400 level. The company suggested that if a correction reflecting pre-holiday risks occurs, investors should consider rotational buying and bargain hunting focused on undervalued sectors starting from the 3,200 level.
Lee Kyungmin, a researcher at Daishin Securities, stated in the report "Action Plan for Investors Ahead of the Chuseok Holiday," released on September 26, that "uncertainties such as the U.S. Personal Consumption Expenditures (PCE) Price Index and concerns over the U.S. economy are overlapping as the holiday approaches." He added, "With global stock markets becoming more sensitive to negative developments, the release of the U.S. employment data (the Department of Labor’s Nonfarm Payrolls Report) on the first day of the holiday could heighten risk aversion and caution." The KOSPI faces an extended holiday period from October 3 (National Foundation Day) to October 9.
The U.S. PCE inflation rate, a key inflation indicator to be released this week, is expected to rise to 2.7% year-on-year, slightly higher than the previous month. Since the Cleveland Federal Reserve’s Inflation Nowcast is presenting figures above consensus, Lee assessed that if inflation comes in higher than expected, projections for mid- to long-term interest rate cuts could be scaled back.
On October 1, just before the Chuseok holiday, the ADP private employment data will be released. Lee explained, "Due to the holiday, it will be difficult to respond to the official Department of Labor employment report (released October 3) in real time, so the ADP data serves as a leading indicator for the U.S. economy and employment situation." He added, "A much weaker-than-expected employment figure could fuel concerns about an economic slowdown, while a strong employment figure could trigger scenarios of delayed rate cuts." Since responses to the employment report will be limited during the holiday, he emphasized the importance of closely monitoring the private employment data.
In addition, concerns over a potential U.S. federal government shutdown, with the new fiscal year starting the same day, are also contributing to uncertainty. However, Lee noted that the likelihood of an actual shutdown is low due to political pressures, and he expects the impact on financial markets to be limited.
Lee assessed the current domestic stock market situation by stating, "With a variety of issues overlapping ahead of the holiday, there is a high possibility of increased risk aversion." He emphasized, "Risk management is important for the KOSPI above the 3,400 level," and added, "If a correction reflecting pre-holiday risks occurs, rotational buying and bargain hunting focused on undervalued sectors could be considered from the 3,200 level."
He further noted, "It will also be difficult to engage in bargain hunting after a rebound in global stock markets during the holiday period." He added, "It is still valid to consider bargain hunting in leading stocks with high earnings contributions to the KOSPI, such as semiconductors, shipbuilding, and defense, despite current price pressures, as well as in undervalued bio and secondary battery stocks relative to earnings."
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