[Good Morning Market] Strong Buying Sentiment Despite U.S. Jitters... KOSPI Expected to Rise

On the 20th, the KOSPI is expected to rise as strong buying sentiment continues despite U.S.-origin risks.

The previous day on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 49,395.16, down 267.50 points (0.54%) from the previous session. The S&P 500 Index ended at 6,861.89, down 19.42 points (0.28%), and the Nasdaq Composite finished at 22,682.73, down 70.91 points (0.31%).

U.S. stock markets saw heightened volatility as concerns surrounding the U.S. private credit market and rising geopolitical tensions in the Middle East came to the fore simultaneously. U.S. private equity firm Blue Owl Capital recently announced that it would sell a total of 1.4 billion dollars worth of assets to secure funds for redemptions and debt repayment, and that it would permanently suspend redemptions for one of its funds under management. As a result, worries over the broader private credit market are once again spreading.

In particular, with the debate over an overheating in artificial intelligence (AI) investments continuing, some are raising the possibility that anxiety could spread across the private credit industry, which has high exposure to the IT sector. For now, the issue remains confined to individual managers, but analysts note that if corporate loan delinquencies become visible, it could evolve into a systemic risk and, in the short term, dampen investor sentiment.

On top of this, escalating tensions between the United States and Iran are another burden. U.S. President Donald Trump has given Iran a 10-day deadline for negotiations and is ramping up pressure by deploying the largest air power to the Middle East since the 2003 Iraq War. As the possibility of a full-scale war between the United States and Iran and concerns over a blockade of the Strait of Hormuz come to the fore, international oil prices are also on the rise.

International oil prices, based on West Texas Intermediate (WTI), reached 66 dollars per barrel, surpassing the previous high. This reflects concerns over potential disruptions to crude oil exports and supply-side anxiety. However, the market also believes that, with inflation pressures emerging as a key political issue ahead of the U.S. midterm elections, the U.S. administration would not want a scenario in which a prolonged surge in oil prices leads to a re-acceleration of inflation. Given that Washington has set a clear negotiation deadline while leaving room for a diplomatic solution, many assess that the likelihood of geopolitical risks becoming structurally prolonged is limited.

With issues such as the AI bubble debate, instability in the private credit market, and geopolitical risks all emerging in quick succession and stoking volatility, the market is on high alert over the possibility that additional negative factors could surface over the weekend. Next week, Nvidia is scheduled to announce its earnings. Attention is focused on whether Nvidia's results can restore confidence in the overall AI industry at a time when investor sentiment toward technology stocks has weakened.

The previous day, the domestic stock market strengthened as the absence of any notable external shocks during the Lunar New Year holiday acted as a source of relief. With buying concentrated in semiconductor and securities stocks, the KOSPI broke through the 5,600 level, and the KOSDAQ also ended sharply higher as foreign and institutional funds flowed in on expectations of government policies to revitalize the KOSDAQ market.

Today, the domestic stock market is expected to see upward pressure strengthen toward the latter part of the session, supported by strong latent buying demand, despite issues in the private market, geopolitical uncertainties, and profit-taking after the previous day's sharp gains.

Lee Sunghoon, a researcher at Kiwoom Securities, analyzed, "Recently, the domestic stock market has shown a weaker correlation with the U.S. market compared with the past, backed by earnings momentum, ample liquidity, and expectations for government policies," adding, "Concerns over the private market and Middle East risks are not issues that will directly damage the fundamentals of Korean companies, so if these factors trigger a short-term correction, it would be appropriate to use it as an opportunity for bargain hunting."