[Good Morning Market] "Abundant Upward Momentum... Easing Concentration and Expecting Stock-Selective Trends"

With all three major U.S. stock indices closing higher in New York, the Korean stock market on January 16 is expected to see a reduction in concentrated buying, supported by abundant liquidity waiting to enter the market. As a result, funds are likely to be distributed across various sectors, leading to a stock-picking trend by industry.

On the 15th (local time), a trader is working at the New York Stock Exchange in the United States. Photo by Reuters Yonhap News

On the 15th (local time) at the New York Stock Exchange, the Dow Jones Industrial Average, which focuses on blue-chip stocks, ended trading at 49,442.44, up 292.81 points (0.6%) from the previous session. The S&P 500 Index, which tracks large-cap stocks, rose by 17.87 points (0.26%) to 6,944.47, while the tech-heavy Nasdaq Index closed at 23,530.022, up 58.272 points (0.25%).

Semiconductor stocks were particularly strong. Robust earnings and investment plans from TSMC, a global foundry (semiconductor contract manufacturing) company in Taiwan, boosted investor sentiment for technology stocks, especially in the semiconductor sector. Nvidia rose by 2.1%, AMD by 1.93%, and Micron by 0.98%. Financial stocks also surged. Goldman Sachs and Morgan Stanley gained 4.63% and 0.67%, respectively, after reporting fourth-quarter results that exceeded market expectations.

However, policy uncertainty remains a variable. The previous day, U.S. President Donald Trump announced a 25% tariff on imported semiconductors that do not contribute to the United States and stated that he would expand the scope of these tariffs.

The Korean stock market is also expected to maintain a favorable trend today. Lee Sunghoon, a researcher at Kiwoom Securities, said, "Ample liquidity waiting to enter the market and the easing of geopolitical uncertainties are acting as driving forces for the market's rise. As the concentration of funds eases, we expect to see a distribution of funds across different sectors, leading to a market driven by stock selection by industry."

He added, "As of January 14, foreign capital, which had been flowing out for five consecutive trading days, returned to net inflows the previous day. If the perception spreads that the upper level of the won-dollar exchange rate-which triggered foreign selling despite positive earnings outlooks-has been confirmed through government intervention, it is necessary to consider the possibility that foreign capital inflows will continue."

Meanwhile, recent foreign capital flows have shifted from a concentration in a few large sectors at the beginning of the year to a more diversified pattern by industry. Lee noted, "So far this week, foreign investors have been net sellers in the semiconductor and automobile sectors, but net buyers in shipbuilding, trading companies, capital goods, construction, architecture, steel, and software. As the earnings season begins, foreign investors are likely to increase their bets on stocks with strong earnings that were previously overlooked."