The aftermath of the impeachment politics following President Yoon Suk-yeol and acting President Han Duck-soo has resonated with economic slowdown and high exchange rates, leading to a week of gloomy days without a 'Santa rally.' Attention is on whether the stock market will experience a 'January effect' of smooth sailing in the first month of 2025.
On the 27th, the KOSPI index closed at 2404.77, a decrease of 1.02% from the previous transaction. The KOSPI index, which had risen by 1.57% on the 23rd, the starting point of the week, creating expectations for a Santa rally, later fell continuously, disappointing investors.
The KOSDAQ index, which had risen for two consecutive transactions until Christmas Eve (24th), fell back in the last two days, giving up its gains. The KOSDAQ index closed at 665.97 on the 27th. Considering that the KOSPI index and KOSDAQ index were 2613.50 and 859.79 respectively a year ago on December 27, 2023, this is a dismal performance.
The impact of the impeachment politics continued. In the National Assembly, an unprecedented 'impeachment of the acting president' led to a battle between the ruling and opposition parties. National Assembly Speaker Woo Won-sik decided that the requirement for the passage of the impeachment motion against Acting President Han Duck-soo and Prime Minister Han Duck-soo would be a majority of 151 seats, resulting in the motion's approval. As political uncertainty persisted, the won-dollar exchange rate surged, reaching the 1480 won range at one point on the 27th ahead of the vote on the impeachment motion.
This week, the stock market atmosphere is expected to remain unsettled as the year-end shutdown and uncertain political situation persist. The domestic market will be closed starting January 1 after the last session on the 30th and will reopen at 10 a.m. on January 2.
In the securities industry, there are analyses suggesting that the stock market might seize rebound opportunities in 2025. Lee Kyung-min from Daishin Securities noted, "As annual revenue calculations begin in the new year, fund managers will actively engage in transactions," adding that "Due to concerns about the martial law situation and slowing export growth, the KOSPI, which has approached the lowest levels in terms of valuation, could be highlighted from a risk-reward perspective."
Kang Jin-hyuk from Shinhan Investment Corp. said, "While strong rises are hard to expect, preparations for a rebound seem to continue." Kang noted that "The selling pressure to avoid transfer taxes has generally eased last week, so buying pressure could flow in again from this week," and added, "The rebound of the U.S. Institute for Supply Management (ISM) manufacturing index just before the martial law situation raised expectations for market recovery, and it is necessary to observe whether the index's upward trend will continue."
This week, attention should be paid to Korea's import and export trends, the Chinese Caixin Purchasing Managers' Index (PMI) for manufacturing, and the U.S. ISM manufacturing index for December.
First, Korea's import and export trends for December, to be announced on January 1, are expected to be solid. Daishin Securities analyzed that, backed by economic stimulus policies in China and Europe and the recent rebound in the U.S. ISM manufacturing index, the environment for export growth is favorable, projecting a December export growth rate of 3.1%, up 1.4% from the previous month. Research Institute Lee Kyung-min forecasted that the December import and export trends could help alleviate the fundamental and performance anxiety regarding the KOSPI index.
The Chinese Caixin PMI for manufacturing, to be announced on January 2, is expected to recover for the second consecutive month. China is accelerating domestic stimulation by issuing a record-high 3 trillion yuan in special liabilities. This Research Institute noted that "the KOSPI index traditionally shows a high correlation with China," adding that "the recovery of China's manufacturing sector will positively influence foreign investment sentiment."
The U.S. ISM manufacturing index for December will be announced on January 3. If the manufacturing index comes in above expectations, it is likely to impact interest rate increases. Currently, the U.S. Federal Open Market Committee (FOMC) shows a 'hawkish stance (preference for monetary tightening).' As of the 26th, the probability of keeping interest rates unchanged in January, according to FedWatch, stands at 91.4%.
Research Institute Kang Jin-hyuk stated, "With Trump's inauguration on January 20, expectations for protectionist policies are likely to keep the manufacturing index favorable, but if it exceeds expectations, it may become a factor for rising market interest rates."
The sales performance announcements of Hyundai Motor and Kia are also highlighted as key events that investors should pay attention to next week. Meanwhile, the U.S. stock market will be closed on January 1, and the Japanese stock market will be closed from the 31st to January 3.