Easing of 'R Fear' Sparks KOSPI Rebound Expectations: Focus on Korea-U.S. Monetary Policies

Recently, the KOSPI has shown a five-day consecutive rise, nearing the 2700 mark, as fears of an economic recession ease

The 'R (Recession) Fear' that has been pressuring global markets is easing, bringing the KOSPI close to recovering the 2700 level. With positive data from the U.S. on consumer spending and employment, market sentiment is shifting towards optimism. This week’s key events include the Bank of Korea’s monetary policy meeting, the release of the July FOMC minutes, and the Jackson Hole Economic Policy Symposium. This post will explore these developments and what to expect moving forward.

1. Easing of Excessive 'R Fear' and KOSPI Rise

Recently, the KOSPI has shown a five-day consecutive rise, nearing the 2700 mark, as fears of an economic recession ease. The U.S. consumer price index (CPI) for July, released on August 13, slightly missed expectations, indicating a modest decline in inflation. Additionally, the July retail sales data released on August 14 surged past expectations, alleviating recession concerns.

Foreign investors have significantly contributed to this rebound, with substantial net purchases in the market, especially in the electronic and electrical sectors that had previously suffered declines due to skepticism about AI profitability. Samsung Electronics also recovered to 80,000 won per share after a 10-day decline.

Experts suggest that the recent market correction was mainly due to stock market concentration and pricing pressures. They believe that with reduced uncertainty and easing price burdens, the stock market is likely to seek gradual recovery.

2. Attention on Korea-U.S. Monetary Policies

This week’s focus is on the monetary policies of Korea and the U.S. The Bank of Korea’s monetary policy meeting, the release of the July FOMC minutes, and the Jackson Hole Economic Policy Symposium are all scheduled. 

The market expects the Bank of Korea to maintain its current interest rates due to concerns over rising household debt. Park Seok-hyun from Woori Bank anticipates that the central bank will hold rates steady to address financial stability issues. Meanwhile, Ahn Ye-ha from Kiwoom Securities believes that the Bank of Korea may not cut rates immediately but could consider it after the Federal Reserve adjusts its policies.

The Jackson Hole meeting, held from August 22-24, will discuss the effectiveness and transmission of monetary policy, with Fed Chair Jerome Powell’s speech scheduled for August 23. The market’s reaction to Powell’s stance will be crucial in determining investor confidence.

3. Recommended Portfolio Strategy

In the current environment, focusing on sectors that could lead the market in a rebound is advisable. Key sectors include AI semiconductors, automotive, financials, conglomerates, shipbuilding, machinery, and defense. Investments in sectors with proven profitability and strong performance potential, such as AI semiconductors, are expected to be beneficial.

This week’s key events in monetary policy will significantly impact market trends. With the easing of 'R Fear,' the KOSPI is showing signs of recovery. Strategic and cautious investment decisions will be crucial as market dynamics continue to evolve. Use this post to guide your investment strategy and navigate the current market environment effectively.