The Iran war enters its fourth week. Although the impact of the Iran situation on the domestic stock market has diminished, the prolonged conflict is expected to significantly affect Korea's financial markets due to heightened geopolitical risk.
In particular, with the Strait of Hormuz remaining blocked, the United States' calculus is getting more complicated. As international oil prices fluctuate and weigh on the U.S. economy, investors are focused on what "exit strategy" the White House will put forward.
This week (Mar. 23–27) ushers in the full-fledged annual shareholders meeting season. It is the first shareholders meeting season following the strong push for amendments to the Commercial Act under the new administration. Experts expect issues to emerge at many listed companies' meetings that could address the chronic undervaluation of the Korean stock market, such as expanding the influence of minority shareholders and strengthening shareholder returns. With the first-quarter "pre-earnings season" arriving, expectations for earnings improvement may also grow.
Despite continued conflict in the Middle East last week (on the 16th–20th), the KOSPI showed relative resilience. The KOSPI opened at 5,510.82 on the 16th and, despite a surge in international oil prices, managed to hold the 5,700 level. On the 20th, the KOSPI closed at 5,781.20.
The stock market is also likely to fluctuate this week in line with geopolitical risk. Lee Kyung-min, a researcher at Daishin Securities, said, "If the United States' exit strategy becomes visible, the market could regain upward momentum," adding, "The key variable is not the duration of the conflict but the restoration of the energy supply chain in the Strait of Hormuz."
The U.S. Federal Reserve's hawkish (favoring monetary tightening) stance could also affect stocks. With the benchmark rate left unchanged at the March Federal Open Market Committee (FOMC), expectations for further rate cuts are receding. Meanwhile, with the end of the "blackout" period during which Fed members do not give speeches or interviews before regular meetings, market volatility could increase.
The domestic market may again turn its focus to fundamentals. As the first-quarter "pre-earnings" season and shareholders meeting period begin, there may be opportunities for gains.
Lee Myung-gan, a researcher at Mirae Asset Securities, said, "Even as volatility in oil prices and exchange rates widens, the domestic market could show a positive trend on earnings and policy momentum," adding, "Ahead of earnings season, a strategy focused on sectors with improving profit momentum and policy beneficiaries is advantageous."
This week, major conglomerates including LG Electronics, Naver, Korea Zinc, SK hynix, Hyundai Motor, and SK are scheduled to hold shareholders meetings. It is the first meeting season since the Commercial Act amendments and capital market advancement policies were introduced. Whether the "Korea discount" can be resolved appears set to be tested.
Researcher Lee Kyung-min said, "It will be a global test of whether domestic corporations are responding to the shift toward 'shareholder capitalism,'" adding, "If major corporations present concrete road maps to improve governance and raise return on equity (ROE), the resolution of the Korea discount is expected to accelerate."
Attention is also turning to policies to revitalize the KOSDAQ market proposed by the government. On the 18th, the government released its "Capital Market Structural Improvement Plan." As part of the KOSDAQ revitalization policy, a "two-tier KOSDAQ" was introduced. The core is to operate the KOSDAQ market by dividing it into a premium segment and a standard segment.
Na Jeong-hwan, a researcher at NH Investment & Securities, said, "Differentiation within KOSDAQ between blue chips and non-blue chips, and between large caps and small and mid caps, is likely to strengthen further," adding, "A strong trend centered on large-cap blue chips could continue compared with small and mid caps."
There is also advice to watch sectors relatively insensitive to external shocks and those likely to benefit from BTS's comeback. BTS will hold an "ARIRANG" comeback live in Gwanghwamun on the 21st and begin a world tour in April.
Kang Jin-hyeok, a researcher at Shinhan Investment & Securities, said, "We should watch whether HYBE recovers its previous peak," adding, "Expectations are rising for earnings at hotels and cosmetics as tourist stays increase."
Meanwhile, on the 24th, S&P Global will release the U.S. preliminary purchasing managers' indexes (PMI) for manufacturing and services for March. The readings are expected to be the first indicators to show the real-economy impact after the Middle East–driven energy shock filtered into the real economy.
Researcher Lee Kyung-min explained, "We need to confirm changes in corporate sentiment at the point when oil prices surged and logistics bottlenecks intensified."