[Good Morning Market] Will the KOSPI Rally Pause? "Expected to Open Lower on Exchange Rate Pressure"

Profit-taking Expected in Sectors Like Robotics
"Neglected Sectors Such as Retail Also Offer Alternatives"

On January 14, the Korean stock market is expected to open lower due to external pressures such as renewed concerns over U.S. inflation, geopolitical uncertainties stemming from Iran, and the impact of the rebound in the won-dollar exchange rate. The fact that the U.S. New York stock market declined across the board overnight, led by weakness in financial and technology stocks, is also likely to weigh on investor sentiment.

Yonhap News Agency

On January 13 (local time), the major indices on the New York Stock Exchange all closed lower, despite the December Consumer Price Index (CPI) coming in at a neutral or better level than market expectations, as several external negative factors overlapped. The Dow Jones Industrial Average, which is focused on blue-chip stocks, fell by 398.21 points (0.8%) to close at 49,191.99. The S&P 500, which tracks large-cap stocks, dropped 13.53 points (0.19%) to 6,963.74, and the tech-heavy Nasdaq lost 24.032 points (0.1%) to close at 23,709.873.

The U.S. December CPI rose 2.7% year-on-year, matching market forecasts. Core CPI was 2.6%, slightly below the expected 2.7%, indicating that inflationary pressures have somewhat eased. However, some core items, such as housing costs (3.2%), remain at high levels, so concerns about inflation have not been completely dispelled. As a result, uncertainty remains regarding the timing of the Federal Reserve's first interest rate cut.

In particular, financial stocks such as JP Morgan (-4.18%), Visa (-2.0%), and Mastercard (-3.76%) plunged after news that the Trump administration is pushing for a cap on credit card interest rates. Technology stocks were also weak. Microsoft (MS) fell 1.4% after announcing it would not pass on increased data center electricity costs to customers. The burden on profitability from large-scale artificial intelligence (AI) infrastructure investments was highlighted, leading to increased selling pressure.

Meanwhile, tensions surrounding anti-government protests in Iran have heightened geopolitical uncertainty. U.S. President Donald Trump announced a complete halt to contact with the Iranian government and warned that countries such as China, which continue to trade with Iran, could face a 25% tariff. These remarks stoked concerns about possible military intervention, causing international oil prices (WTI) to rise by 2.8%.

The KOSPI, which surged nearly 1.5% to a record high the previous day amid strength in shipbuilding, defense, and automobile sectors, is expected to inevitably open lower today due to fatigue from the recent rally and profit-taking. In particular, as profit-taking emerges during trading hours, especially in export and robotics sectors, there is a high possibility of a rotation into previously neglected sectors. The won-dollar exchange rate rebounded to the 1,470 won level the previous day, dampening foreign capital inflows, which is also expected to be a significant burden.

Han Jiyeong and Lee Sunghoon, researchers at Kiwoom Securities, commented, "Fatigue from consecutive gains is accumulating, so in the short term, we may see a reversal in the recent concentration on soaring stocks." However, they added, "Despite the semiconductor sector undergoing a period of adjustment after Samsung Electronics' preliminary earnings announcement last week, the index is rising thanks to rotation into other leading sectors such as shipbuilding, defense, nuclear power, and automobiles, which is a positive sign. With upward momentum in earnings consensus, the valuation burden is also low."

They further suggested, "It may be an alternative to resume gradual buying of semiconductors, which have been the leading stocks, or to shift attention to sectors that benefit from a weaker won, such as cosmetics and retail, which have been overlooked since the beginning of the year."