The inauguration of President-elect Donald Trump is just five trading days away. Trump will take office as the 47th president of the United States at noon on the 20th (local time). In Korea, that will be at 2 a.m. on the 21st. The U.S. president enjoys a honeymoon period of approximately 100 days post-inauguration. This is a time for Congress and the media to refrain from criticism and wait as the new president and administration settle in.
However, Trump is expected to push forward strongly starting on his first day in office. During last year's election campaign, he said, 'I will not be a dictator except on the first day (January 20).' Trump has declared 41 promises that he plans to implement 'on the very first day.' U.S. media reported that more than 25 executive orders would be necessary for this. Through Facebook, Trump mentioned strengthening the southern border, expanding oil production, tax cuts, and tariff increases as key policies during the honeymoon period.
The upcoming inauguration of President-elect Trump is expected to plunge the U.S. stock market and the domestic market back into uncertainty. First, foreign investors have returned to net buying, and the domestic market, which has been rebounding, is showing signs of a quick rotation. Na Jeong-hwan of NH Investment & Securities noted, 'Given the uncertainties surrounding Trump’s inauguration, it is highly likely that the domestic market will experience a rotation phase.'
The U.S. stock market is also seeing increased volatility due to concerns over rising prices and interest rates stemming from Trump's tariff policies. The S&P 500 index has dropped 4.2% from its December peak. Jo Yeon-joo of NH Investment & Securities said, 'As uncertainties surrounding Trump’s policies are expected to increase before and after the inauguration on the 20th, volatility in stock indices is likely to continue in the short term.'
While the approaching uncertainty is unavoidable, opportunities do exist. Research Institute Jo noted, 'The core policies of Trump’s second administration will have both positive and negative aspects from the perspective of the stock market, making them factors of uncertainty.' However, he added, 'The flow of the market will change depending on which policies are implemented first and with what strength.'
He continued, 'Considering the replacement of financial institution heads and the deregulation of artificial intelligence (AI) corporations and energy corporations during Trump’s second honeymoon period, it is expected that the finance and tech sectors will benefit.' Additionally, he pointed out, 'Industries such as aerospace, defense, and manufacturing, which may see an increase in government expenditure, are also likely to be positively impacted.'
Hanwha Investment & Securities expressed expectations that U.S. manufacturing will come to the forefront. Kang Jae-kyu, a researcher at Hanwha Investment & Securities, said, 'This is a time when expectations for policy benefits can increase,' adding that 'Investor sentiment toward manufacturing-related corporations is likely to become stronger.'
Especially during Trump’s second administration, further strengthening of tariff policies is expected, which will likely signal positively for U.S. manufacturing corporations. Recent reports have suggested that Trump is considering declaring a 'national economic emergency' after taking office to apply the 'universal tariff' he emphasized during the campaign. Research Institute Kang stated, 'If tariffs are increased, U.S. companies will prefer those with production capabilities in the U.S. to reduce the cost burden of tariffs, which will likely promote reshoring (the return of production technology to the domestic market).' He noted that during the height of the U.S.-China trade conflict in 2017-2018, the gross profit and operating profit (EBIT) of major manufacturing companies expanded.
In Korea, the defense and shipbuilding sectors are noteworthy. As Trump’s inauguration approaches, hearings for high-ranking officials in the State Department, Ministry of National Defense, and National Security Council (NSC), responsible for U.S. foreign and security policy, will begin this week. Marco Rubio has been nominated as Secretary of State, Peter Hegseth as Secretary of National Defense, and Michael Waltz as a Congressional Representative from the Republican Party. Eugene Securities identified 'hardliners on China' as a common trait among these foreign policy officials.
Yang Seung-yoon of Eugene Securities particularly drew attention to Elbridge Colby, nominated as the deputy secretary of defense responsible for policy, stating, 'If we summarize the contents of Colby’s book, 'Asia First,' it indicates that while the existing U.S. government’s policy to counter China will be maintained, military competition may further intensify and the U.S. will emphasize the importance of alliances while focusing on improving the self-defense capabilities of allied nations through their military investments.'
He continued, 'As power concentrates in Asia, geopolitical anxieties are expected to increase along with demand for weapons, suggesting that there may be proactive cooperation with the U.S. in sectors where Asian countries hold competitive advantages, such as shipbuilding.' He expressed hope that a favorable environment would be created for Korean defense and shipbuilding-related stocks.