President Donald Trump delayed imposing reciprocal tariffs on countries excluding China for 90 days, resulting in KOSPI and KOSDAQ indices jumping around 6 percent on the 10th. However, analysts noted that it is too early for the market to feel reassured.
Lee Eun-taek, a researcher at KB Securities, evaluated that President Trump's tariff strategy is the same as during the first administration. President Trump held a summit with Chinese President Xi Jinping in December 2018, announcing a 90-day tariff delay. Additionally, initially hardliner Treasury Secretary Steven Mnuchin, a moderate, led the negotiations. President Trump's recent 90-day tariff delay, with leadership passing to Treasury Secretary Scott Besent, mirrors his first administration.
Researcher Lee said, “If President Trump's actions mirror those of the first term, the period might remain calm for a while.” However, they added, “During the first term, President Trump imposed tariffs before the end of the grace period, stating that countries did not show 'respect to America,' and may use the tariff card again this time.”
NH Investment & Securities identified President Trump's approval ratings, changes in the Federal Reserve's (Fed) stance, and corporate performance as remaining variables. The initiation of tariff negotiations during the first term was also intertwined with declining approval ratings, and the market rallied when the Fed changed its economic outlook and monetary policy direction in 2019.
Baek Chan-kyu, a researcher at NH Investment & Securities, noted that “the market has already experienced a trade war, and since the Trump administration is negotiating with a wide range of countries alone, the negotiations could proceed quickly.”
Jung Hyun-jong, a researcher at Korea Investment & Securities, also stated, “With significant uncertainty remaining regarding tariffs, it is difficult to determine the lowest asset prices.” Furthermore, the U.S. stock market is overvalued. Since 2004, the long-term price-earnings ratio (PER) of U.S. stocks has averaged 22.7 times, but is currently at 30.5 times, indicating a potential for further adjustments.
Conversely, China and Korea remain at levels 65% and 84% lower, respectively, compared to their average long-term PER. Researcher Jung advised, “Attention should be paid to investment opportunities in stocks whose prices have excessively fallen compared to corporations' fundamentals or revenue.”