U.S. reciprocal tariff uncertainty peaked and began to ease, resulting in a recovery in the domestic stock market. Last week (April 14-18), the KOSPI index started at 2432.72 points (p) and rose to 2483.42p, an increase of 2.1%. The KOSDAQ index increased from 695.59p to 717.77p, a rise of 3.2%.
However, the hawkish (tightening) remarks by Jerome Powell, chair of the U.S. Federal Reserve (Fed), and the impact of the semiconductor export regulations have led to continued caution. Powell warned on the 16th that "the level of tariff increases announced by the (U.S. Administration) is much higher than expected," indicating anticipated inflation and growth slowdown.
This week (April 21-25), the domestic stock market is expected to show notable movements in policy and political theme stocks ahead of the early presidential election amid concerns of an economic downturn in the U.S. It is also important to pay attention to the upcoming earnings announcements from major domestic corporations and U.S. tech companies like Tesla and Amazon.
In the securities industry, analysts have diagnosed that the tariff risks posed by U.S. President Donald Trump have peaked. Trump's reciprocal tariff policy has entered the negotiation phase after a 90-day grace period, and the anticipated risks related to the tariff policy have already been reflected in the market.
Lee Kyung-min, a researcher at Daishin Securities, noted, "Tariffs on electronic devices and automobile parts have been eased, and the introduction of regulations instead of tariffs on semiconductors and pharmaceuticals has confirmed the maximum pressure from Trump," adding that "Starting with Japan, expectations have been reflected in the negotiation process, leading to a transition from panic to relief in the securities market."
In the short term, there are analyses suggesting that expectations for stock price increases have grown. NH Investment & Securities predicted that the KOSPI index would move in the range of 2380-2600p this week. It is expected that policy expectations and the promises of presidential candidates during the early election phase will drive the stock price up.
On the 18th, the government held a Cabinet meeting and announced a supplementary budget plan of 12.2 trillion won. The budget includes provisions for wildfire damage restoration, responses to trade issues, support measures for artificial intelligence (AI) sectors, and assistance for small businesses and vulnerable groups. Additionally, the Bank of Korea has sent a message to the market that there is a high possibility of a rate cut at its Monetary Policy Committee meeting next month.
Experts advised to pay attention to stocks that have potential for an upswing in the second half of the year. Investing in sectors such as trading, securities, machinery, and IT hardware, which have had upward revisions, or increasing investment in stocks unrelated to the recent weak stock market are strategies to consider. Shinhan Investment Corporation suggested domestic-related stocks such as media, utilities, hospitality and leisure, and retail.
Lee Dong-gil, a researcher at Shinhan Investment Corporation, stated, "Sectors that have seen a decrease in prices due to recent stock adjustments, such as hospitality and leisure, automobiles, and retail, which have dividend yields above the top 30% of the KOSPI, have also undergone significant corrections recently," and recommended a strategy of buying at low prices.
As we enter the full swing of first-quarter earnings season, attention should also be paid to the results and forecasts of major domestic and international corporations. Earnings reports for U.S. tech stocks will be released starting with Tesla on the 22nd, followed by Amazon on the 24th and Intel on the 24th.
The securities industry is expecting strong performance from tech stocks in the first quarter. This is due to strong pre-purchase demand ahead of the U.S. tariff imposition. However, performance guidance, which has a larger impact on stock prices, is likely to be presented conservatively considering the tariff impact.
On the 21st of this month, earnings reports from domestic corporations such as LS ELECTRIC, HD Hyundai Electric on the 22nd, Samsung Biologics, LG Innotek, and others will follow in succession. On the 24th, earnings for the first quarter will be revealed by companies including SK hynix, Hyundai Motor, HD Hyundai Heavy Industries, KB Financial, Samsung SDI, and LG Display.
Lee Kyung-min stated, "Sectors that have become cheaper due to recent stock price adjustments may attempt a rebound," but he also noted that "stocks with significant price and valuation burdens may provide opportunities for profit-taking." He suggested a buying strategy focused on sectors that have seen excessive declines, such as semiconductors, automobiles, secondary batteries, the internet, and pharmaceuticals and biotechnology.