Christmas is just one day away. Every year in December, there is high anticipation for a 'Santa rally' in the stock market, but this year it is likely that Santa will not visit the Korean stock market. The previous day, the KOSPI index surged by 1.57%, but it is still down compared to the end of November.
Last night, the New York stock market successfully rebounded, but it remains uncertain whether that warmth will reach our country across the Pacific Ocean. With only four trading days left for the Korean stock market in 2024, vitality is low. First, the outlook for next year's South Korean GDP growth is not promising. Choi Sang-mok, Deputy Prime Minister and Minister of Strategy and Finance, noted in a news conference the previous day (23rd), "The growth outlook for next year is inevitably downward due to various downside risks, and it appears likely that the growth rate will fall slightly below the potential growth rate." Considering that the potential growth rate for the South Korean economy is around 2%, this suggests that next year's growth rate will be in the upper 1% range.
Recent forecasts from overseas investment banks (IBs) are also bleak. According to the International Financial Center, global IBs, including Citi, projected South Korea's economic growth rate for next year at 1.8% as of the end of last month. This figure is a decline of 0.2 percentage points compared to a month ago.
The repercussions of the martial law situation experienced earlier in December are still evident. As a result, investor sentiment in the Korean stock market remains suppressed. Kim Ji-won from the KB Investment & Securities Research Institute stated, "Given that major currency policy events have concluded, there is a lack of indicators and momentum to seek a rebound, making it difficult to expect a year-end rally," and added, "For the time being, anxiety sentiment will persist, and the market will inevitably be linked to the trends in exchange rates and interest rates."
Even if Santa does not come, there are ways to prepare for the year-end without crying. It is advised to focus on undervalued stocks relative to performance and sectors with excessive declines, even if the KOSPI index is falling.
Lee Kyung-min from the Daishin Securities Research Institute said, "It is true that the expectations for a Santa rally and year-end rally are not high," but added, "I believe at least we will be able to achieve some year-end success."
He also mentioned, "Attention should be given to undervalued stocks relative to performance and sectors with excessive declines, such as semiconductors, automobiles, secondary batteries, trading and capital goods, construction, and machinery," and predicted, "If market stability increases, attempts to rebound among undervalued sectors relative to performance will become more pronounced." Furthermore, he noted that if the KOSPI index falls below the 2500 level, a volatility-utilization strategy for increasing positions will be effective, and if it breaks below the 2400 level, it should be viewed as a short-term undershooting, and the strategy to increase positions should be strengthened.