The 16th was the first day the stock market opened after the impeachment motion against President Yoon Suk-yeol was passed in the National Assembly. While there were expectations for a rise as uncertainty, which the stock market dislikes the most, was removed, the Korea Composite Stock Price Index (KOSPI) closed lower. However, the securities market maintains an optimistic atmosphere, as the unexpectedly erupted political risk has now entered a realm that can be assessed alongside the impeachment process, which is expected to revive investor sentiment.
Lee Jae-man, a research institute member at Hana Securities, noted, “Morgan Stanley Capital International (MSCI) dollar-denominated Korea index has fallen by 26% compared to its high this year,” adding, “There is still potential for further rebounds in the domestic stock market after the impeachment vote.” Yang Hae-jeong, a research institute member at DS Securities, said, “Individual selling has reached its end, and pension funds, which had been persistent in selling, have turned to buying,” stating, “Due to the decline in the KOSPI, the domestic weighting has decreased more than planned, and the gap with overseas markets is excessive.”
Of course, it is not a stage to be relieved. Kim Dae-jun, a research institute member at Korea Investment and Securities, said, “The economic outlook has worsened after a series of events,” emphasizing, “It is necessary to remember that the stock market tends to follow the economy in the long run.” Kim added, “From now on, it is important to respond quickly to changes in the market.”
Experts noted that the sectors that have risen the most during the recent rebound phase are likely to continue to outperform in the medium term. However, separately, in the short term, a market adjustment phase may occur. Jo Jun-ki, a research institute member at SK Securities, stated, “Even without particular reasons, sectors that have risen too much may face profit-taking pressure, while sectors that have underperformed may see compensatory buying.”
Hana Securities identified sectors expected to see an increase in net profit next year among those with excessive annual declines, including semiconductors, banking, software, IT hardware, and defense. Instead, Daishin Securities recommended sectors that are undervalued in relation to performance and have also seen excessive declines, such as semiconductors, automobiles, secondary batteries, machinery, construction, and trading & capital goods.
Lee Kyung-min, a research institute member at Daishin Securities, noted, “As market stability increases, the attempts for rebounds in undervalued sectors relative to performance will become more pronounced,” and added, “It is necessary to expand interest in undervalued sectors with greater valuation appeal rather than strong sectors currently.”