[Good Morning Market] "KOSPI and KOSDAQ Expected to Rebound on Perceptions of Excessive Decline"

"Focus on U.S. Inflation Data and Semiconductor Earnings"
"Staggered Buying in Sectors with Improved Earnings Outlook Remains Valid"

With the three major U.S. stock indexes closing mixed, the Korean stock market is expected to open higher on December 17, driven by perceptions that the previous day's decline was excessive.

On the 16th (local time), a trader is working at the New York Stock Exchange in the United States. Photo by AFP

On December 16 (local time), the blue-chip-focused Dow Jones Industrial Average closed at 48,114.26, down 302.3 points (0.62%) from the previous session, while the large-cap-oriented S&P 500 Index finished at 6,800.26, down 16.25 points (0.24%). In contrast, the tech-heavy Nasdaq Composite Index ended the day at 23,111.462, up 54.049 points (0.23%).

By stock, Tesla rose 3.07% to close at a record high of $489.88 per share. Tesla CEO Elon Musk announced that the company is conducting a pilot operation of unmanned robotaxis in Austin, Texas, which helped the stock climb more than 3% for the second consecutive day. Energy stocks were weak due to falling international oil prices, with ExxonMobil and Chevron dropping 2.6% and 2.08%, respectively. Artificial intelligence (AI) stocks appeared to stabilize after a sharp decline, as Oracle and Broadcom rose 2.02% and 0.44%, respectively, and Nvidia gained 0.81%.

The Korean stock market is expected to open higher today. Han Ji-young, a researcher at Kiwoom Securities, said, "The market is likely to rebound at the open due to perceptions that the previous day's sharp drop of over 2% was excessive, the inflow of technical buying, and the stabilization of U.S. AI stock prices."

Market attention is focused on the November Consumer Price Index (CPI), a key indicator for gauging the U.S. Federal Reserve's decision on interest rate cuts. The CPI is scheduled to be released on December 18, and on the same day, U.S. semiconductor company Micron will also announce its earnings. On December 19, the U.S. Personal Consumption Expenditures (PCE) Price Index will be released.

The researcher noted, "As can be inferred from the limited rebound in the U.S. stock market, the market remains in a cautious mode. With major U.S. events concentrated on a single day, both caution and anticipation are coexisting." He added, "The Korean stock market is also expected to shift to a sector rotation trend, with the strength of the intraday rebound likely to be limited."

He further commented, "Due to the sharp decline the previous day, the forward price-to-earnings ratio (PER) of the KOSPI has dropped to 10.1 times. It is also worth recalling that during two to three correction phases last month, downside rigidity emerged at the PER 10.0 level. If further corrections occur in the future, it would be appropriate to respond by making staggered purchases, focusing on sectors such as shipbuilding, cosmetics, trading companies and capital goods, and semiconductors, which have seen improved earnings forecasts since this month."