U.S. President Donald Trump’s 'tariff war' continues to shake the market. The impact of the tariffs is significant, but the market’s fatigue has increased as events swing back and forth based on President Trump’s remarks.
The flow of the domestic stock market last week (24th to 28th) illustrates this well. The Korea Composite Stock Price Index started at 2,636.43 on the 24th and rose to 2,643.94 on the 26th after President Trump mentioned he could show 'flexibility' regarding tariffs. However, the index ended at 2,557.98 on the 28th after Trump announced a 25% tariff on imported cars and parts. This marked a break below the 2,600 level for the first time in 11 trading days. The Korea Securities Dealers Automated Quotations index also fell by 25.65 points (3.6%) over the week, dipping below 700 for the first time since January 2.
The Trump administration is expected to announce specific details regarding mutual tariffs on April 2 (local time). Whether South Korea is included in the 'Dirty 15,' a group that imposes significant tariffs on the U.S., is a key factor. If countries retaliate with tariffs, the sentiment to avoid risky assets in the market may grow.
Related indicators from the U.S. labor market are also expected to be released in succession. ▲ April 1 job openings and labor turnover survey (JOLTs) ▲ April 2 ADP’s March national employment report ▲ April 4 March non-farm employment figures and unemployment rate, among others. There are concerns that the unemployment rate may worsen as a result of intensified layoffs in the federal government.
Yumi Kim, a researcher at Kiwoom Securities, noted, "Labor market deterioration is expected to continue, especially centered on job openings," adding, "Considering the uncertainty of the Trump administration's tariff policy, corporations may become more cautious in their investment and employment plans, increasing concerns about U.S. growth."
The full resumption of short selling is another factor that can increase volatility in the domestic stock market. The allowance for short selling on Korea Composite Stock Price Index 200 and Korea Securities Dealers Automated Quotations 150 stocks is the first time in 17 months, and for all stocks, it's the first time in nearly five years.
Securities firms are optimistically assessing the impact of the resumption of short selling on the overall market. This is because foreign investors, who pursue stable revenue by simultaneously utilizing long and short strategies, may flow into the market. The problem lies with the sectors and stocks that have a high valuation burden and an increased share of borrowed trading. If short selling transactions are concentrated, stock prices may experience sharp fluctuations in the short term.
Kyung-min Yi, a researcher at DAISHIN SECURITIES, advised to be cautious with sectors such as general trading companies, capital goods, shipbuilding, IT electronics, machinery, chemicals, IT hardware, and healthcare, while paying attention to relatively undervalued sectors like semiconductors, automobiles, displays, retail and distribution, and utilities in light of the resumption of short selling.
It is also necessary to pay attention to export indicators that can gauge the fundamental strength of the domestic stock market. March export statistics will be announced on April 1. Recently, as prices of memory semiconductors have bottomed out and begun to rise, attention is focused on whether the growth rate of semiconductor exports will turn positive and the increase in exports to China under the government's 'replace old with new' policy.
The outcome of the impeachment trial of President Yoon Seok-yeol is also significant. The Constitutional Court has completed the deliberation on the impeachment trial of President Yoon, and the ruling is imminent. As the acting chief justice of the Constitutional Court, Moon Hyung-bae, and Justice Imi-seon are set to retire on April 18, there is a possibility that the ruling will be made this week.