The KOSPI index, which started at 2655.28 last year, closed at 2399.49, nearly a 10% drop. The KOSDAQ index also fell, wrapping up the year at 678.19 after starting at 866.57, a decline of more than 20%. The stock price of Samsung Electronics, which has the largest market capitalization among KOSPI and KOSDAQ, fell over 32% over the year.
As assets melted away like cotton candy in water, domestic investors packed up. This was due to the feeling that offshore investments were more comfortable. In fact, the S&P 500 index, favored by Korean investors, jumped 25.89% last year, while the Nasdaq index surged 33.56%. The stock price of Apple, which has the largest market capitalization, also rose by 37.71%.
Given that many investors have accumulated pleasant experiences in the U.S. market, there is a prevailing outlook that overseas investment will ignite again this year. In this context, a noticeable trend in the U.S. market is that mega-cap tech stocks are leading the market.
Until November of last year, small and mid-cap stocks, cyclical stocks, bank stocks, and industrial stocks rose due to the reentry effect of former President Donald Trump into the White House. However, in December, the Russell 2000 index for small caps dropped by 8%. Conversely, the Nasdaq index increased by 3%. The rise in the stock prices of the Magnificent 7 (Nvidia, Apple, Microsoft, Meta Platforms, Amazon.com, Alphabet, and Tesla) stood out as the year came to a close.
Analysts note that January is a critical time for selecting individual securities. Stocks that rise in the first month often establish themselves as leading stocks for the first half of the year.
A Hanwha Securities analysis of stock returns in January since 2010 found that the top 1% performing stocks yielded an average excess return of 4.1% over the S&P 500 index. In contrast, the 3rd place stocks lagged behind the index by 0.2%. Once stocks fall below the 20th place, they can underperform the index by more than 4%. Therefore, it is said that there is a need to closely monitor the stock price trends of U.S. big tech stocks in January next year.
Recently, companies with upward earnings estimates have also garnered attention. The higher the earnings estimates, the better the stock price returns tend to be. Over the past four weeks, Tesla's earnings per share (EPS) was revised up by 3.0%, resulting in a 19.4% increase in its stock price. Microsoft also saw a 1.0% rise in EPS estimates during the same period, with its stock price climbing by 4.7%. By industry, the EPS estimate for the automotive sector increased by 5.7%, while media rose 1.5%, software 0.9%, retail 0.8%, and technology hardware 0.7%.
However, recent warnings have emerged that caution is necessary as the U.S. stock market has risen significantly. While it may take time to determine market peaks, it indicates that assets that have risen substantially should be evaluated more stringently.
Kim Hak-kyun, head of research at Shinyoung Securities, noted, ""The phrase 'escaping the Director General is intelligence' could symbolize the market in 2024," and added, "While diversifying a portfolio with U.S. stocks from a long-term perspective is necessary, U.S. stocks have not always been invulnerable assets." Researcher Lee Ung-chan from iM Securities said, "The Korean stock market is starting 2025 from a level where further declines are difficult, while the U.S. stock market is beginning the year at a level that is not easy to rise further. We must keep an eye on the policies of the Trump administration."