“I’ve experienced the Korean stock market!!”
“Why is that guy crawling back here again?”
This has been a joke circulating among domestic investors since the end of last year. It is a twist on the line “I have tried this game” from the Netflix series “Squid Game 2,” used to mock those who got stuck in Korean stocks and returned to investing again.
The Korean stock market was atrocious last year. The KOSPI and KOSDAQ indices fell by over 9% and 20%, respectively. Considering the depreciation of the won, the KOSPI index dropped 20% and the KOSDAQ index fell 30% in dollar terms.
However, the atmosphere at the beginning of the new year is different. As of the previous day, the KOSPI index has risen by 5% this year. During the same period, the KOSDAQ index also rose by 6%. It has jumped from the lowest returns among major global stock indices to the highest.
In particular, Samsung Electronics, the leader in the KOSPI market, continued its upward trend even after announcing disappointing fourth-quarter results (October to December) that fell short of market expectations. Its year-to-date increase is already 8.7%. MERITZ Securities compared this stock price trend of Samsung Electronics to the first quarter of 2019. At that time, despite the memory market downturn and performance falling short of forecasts, the market rather sought to buy at lower prices.
Kim Sun-woo, a researcher at MERITZ Securities, noted, “Unlike in the past, the efforts to reduce investments alone will not recover the memory competitiveness issues faced by Samsung Electronics, thus it must solve the tasks of passing quality certification for high-bandwidth memory and securing competitiveness in 1cnm processes.”
Considering Samsung Electronics’ share of the domestic stock market, this means there’s little to no reason to feel reassured. For reference, as the average selling price (ASP) of memory continued to weaken, both the KOSPI and KOSDAQ indices turned downward in the second quarter of 2019.
The variable of the Donald Trump administration’s second term in the United States also remains. There is a high chance that the U.S. market, as well as the domestic stock market, will be shaken by a single word from President Trump. Already, following Trump’s note that “cooperation is needed,” stocks in the shipbuilding industry soared, while those in the wind power sector, which he stated would face bans on new projects, took a hit.
It is likely that social media (SNS) should also be monitored, similar to the Trump administration’s first term. On Dec. 24, 2018, just before Christmas, then-President Trump tweeted a barrage of criticisms against the Federal Reserve (Fed), causing the three major U.S. stock indices to plummet. The domestic stock market, which reopened after the holiday, also saw declines.
In May of the following year, President Trump tweeted that he would raise tariffs on China from 10% to 25%, leading to continued poor performance in the domestic stock market after Children’s Day holidays. This was referred to as the “Trump anxiety” due to the initials of Trump and Twitter.
Trump’s stage on social media has shifted to “Truth Social.” Coincidentally, the initials are still “T,” and “Trump anxiety” may be repeated. Having experienced it once, I will need to follow his Truth Social account ‘@realDonaldTrump.’