"Santa Rally Effect Is Weak in Korean Stock Market... Instead, There Is a January Effect"

"Probability of a Santa Rally in the U.S. Stock Market Is 76%"
"The Santa Rally Is Selective... Avoid Excessive Expectations"

Kim Daeho, Director of the Global Economic Research Institute, stated that there is a high possibility of a year-end stock market rally, known as the "Santa Rally," but cautioned that volatility could increase depending on individual stocks.

On December 24, during CBS Radio's "Kim Hyun-jung's News Show," Director Kim said, "After analyzing changes in the U.S. stock market since 1950, I found that the probability of stock prices rising at the end of the year was 76%, and when they did rise, the average increase was 1.3%."

Traders are working on the floor of the New York Stock Exchange (NYSE) in the United States. Photo by UPI Yonhap News

However, Director Kim added, "The Santa Rally is selective. In other words, since results can vary significantly depending on the stock, excessive expectations should be avoided." He continued, "In the United States, if you make a profit from stock investments, you pay capital gains tax, and if you incur a loss, your taxes are reduced. To pay less tax at the end of the year, you need to quickly dispose of stocks that have incurred losses. For this reason, investors sell underperforming stocks and use the proceeds to buy quality stocks."

He went on to say, "Instead of focusing on whether the Santa Rally will happen, stock investors should pay close attention to quality stocks that show strength at the end of the year and use them as a benchmark for next year. This is the lesson of the Santa Rally. Whether or not stock prices rise due to this year's Santa Rally is not important."

Director Kim also noted, "In the case of the domestic stock market, the Santa Rally effect is weak. Instead, there is a January effect in Korea," adding, "Because of corporate income taxes, stocks are sold at the end of the year and bought back in January, so the pattern is different from the United States. We cannot predict what kind of gifts the Santa Rally will bring, so it is necessary to wait and see."

Meanwhile, on December 23 (local time), all three major U.S. stock indices closed higher. The Dow Jones Industrial Average, which is focused on blue-chip stocks, rose 0.16% to close at 48,442.41. The S&P 500 Index, which is centered on large-cap stocks, climbed 0.46% to a record high of 6,909.79. The tech-heavy Nasdaq Index gained 0.57% to finish at 23,561.844.

On this day as well, AI-related stocks led the gains. Nvidia's share price jumped 3.01%, while Broadcom rose 2.3%, both showing strong performance. Among the big tech companies, Alphabet increased by 1.48%, Meta by 0.52%, and Microsoft by 0.4%.

Meanwhile, the New York Stock Exchange will close early at 1 p.m. on December 24, Christmas Eve, and will be closed on Christmas Day.