"NATO Collapse? At Least Not Now... Correction Is a Buying Opportunity"

Hana Securities Report
Abundant Liquidity and Effective Pro-Market Government Policies

On January 21, Hana Securities analyzed that concerns over the collapse of the Atlantic alliance, rather than just a rift, are the cause of the recent correction in the U.S. stock market.

Kim Dooun, a researcher at Hana Securities, stated, "Europe is making up its mind to part ways with the United States," adding, "Although investor sentiment played a significant role in last night's financial markets, rational judgment will prevail when considering the practical economic interdependence."

He continued, "The paradigm shift triggered by President Donald Trump's approach to trade wars could ultimately lead to the collapse of NATO, an alliance that has lasted for 80 years. However, at least for today, that is not the case."

He emphasized, "The Trump administration, struggling with declining approval ratings, needs to externalize internal discontent ahead of the midterm elections in November. Meanwhile, Europe faces the survival challenge of reconstruction after years of war."

Kim noted, "NATO remains a strategically important channel for both Europe and the United States. Unless there is a systemic risk, we should recall what happened in April of last year." He also explained, "The artificial intelligence (AI) revolution suggests productivity improvements that will surpass the IT revolution of the mid-1990s. As a result of bottlenecks (supply constraints) and shortages (excess demand), new opportunities have opened up in key industries such as memory, power, raw materials, shipbuilding, and defense."

Kim added, "Although stock prices have risen significantly, they are accompanied by performance improvements driven by higher operating margins. Liquidity remains abundant, and the Korean government's pro-market policies are still effective." He continued, "On April 2 of last year, the shock led to a roughly 12% drop in the U.S. stock market over two days, while the Korean stock market fell by 5.5%. In retrospect, that moment was an opportunity."