In the U.S. market, there is a term called 'September effect' which refers to the tendency for the market to show weakness in September compared to other months. This term originated from the fact that since 1928, the average revenue of the S&P 500 index in September has recorded a negative (-) figure.
Concerns about the September effect have also impacted the Korean market. Since 1991, the average revenue of the KOSPI index in September has been -0.6%, while the KOSDAQ has been -3.2%, indicating poor performance in both indexes. The KOSDAQ also dropped by an average of 1.2% in October.
However, this September has a significantly different atmosphere. As the U.S. job market tightens, the possibility of interest rate cuts by the U.S. Federal Reserve has increased, and these expectations are stimulating investment sentiment in stocks.
Some analysts suggest that the U.S. Federal Reserve may cut interest rates three times within the year. The global bank Standard Chartered forecasts that after the employment data is released, the Fed may implement a 'big cut' (a 0.5 percentage point decrease) this month.
Expectations for U.S. interest rate cuts are also impacting the domestic stock market. Unlike the typical seasonal weakness seen in September and October in previous years, this time it is suggested that entering a cycle of interest rate reduction could act as a positive factor.
When the stock market shows a different atmosphere than usual, what strategies should investors formulate? Experts are focusing on the KOSDAQ index, which has been neglected until now, and has rebounded significantly. This month, the KOSDAQ index has risen about 3%, showing a clearer upward trend than the KOSPI (1.1%).
The main driver behind the rise of the KOSDAQ is the pharmaceutical and biotechnology sectors. Currently, 12 out of the top 20 companies by market capitalization on the KOSDAQ are related corporations, demonstrating a distinct bullish trend. Additionally, under the interest rate cut policy, technology stocks such as artificial intelligence (AI), semiconductors, and robotics are expected to benefit as the funding environment improves.
Sangsangin Investment & Securities advised maintaining a large-cap-centered investment strategy that has been advantageous regardless of the flow of the dollar, while adjusting the weight of growth and value stocks based on the direction of the dollar's value.
Kim Kyung-tae, a researcher at Sangsangin Investment & Securities, recommended, 'Besides biotechnology, AI, and robotics, it is advisable to increase the weight of sectors such as trading firms, capital goods, transportation, machinery, and securities, which have shown relative revenue performance.' He noted, 'However, it is necessary to capture better buying opportunities in essential consumer goods, telecommunications services, beauty, clothing, and toy sectors.'
However, concerns about economic recession remain a variable. If the current employment weakness in the U.S. leads to a recession, even if interest rate cuts begin, it could indeed become a burden for the stock market. This necessitates close attention to the U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) scheduled to be announced on the 10th and 11th.
The value of the dollar has recently weakened. The dollar index, which reflects the dollar's value against the currencies of six major countries, has dropped 2.4% since August. Lee Eun-taek, a researcher at KB Securities, stated, 'Generally, the dollar, which is a safe asset that tends to strengthen during times of increased recession concerns, has recently moved in the opposite direction.' He suggested that this could indicate the market is interpreting recession differently.