"Korean Stock Market Expected to Rise Post-Impeachment Due to Domestic Demand Stimulus Expectations…Buy on Dips"-NH

"Won-Dollar Exchange Rate, 1450 Won as a Valid Resistance Line"

NH Investment & Securities stated on the 16th that regarding the impact of the impeachment situation on the domestic stock market, "After the impeachment, the domestic financial market is likely to rise, reflecting expectations of the possibility of a new government launching in the second half of next year."

Kim Byung-yeon, a researcher at this securities firm, explained, "In addition to structural problems due to long-term recession concerns, the biggest obstacle for the domestic economy has been the lack of fiscal and monetary policies compared to other countries." He added, "Along with the slowdown in domestic demand, the export structure relying on some innovative components and concerns about the launch of the Trump administration have been continuous pressure factors for the Korean economy."

He further elaborated, "Of course, it will be difficult for a new government to improve Korea's long-term potential growth rate," and added, "Concerns about export slowdown due to tariff increases by the Trump administration still exist."

Kim predicted, "However, in the first half of next year, expectations for domestic demand stimulus measures and expansionary fiscal policies in Korea will expand," and anticipated that "Efforts to stabilize the capital market, including foreign exchange, through the supply and management of domestic liquidity amid rapid political volatility will be reassessed."

The won-dollar exchange rate is expected to be a valid resistance line at 1450 won.

He said, "There is a high possibility that it will move sideways around 1400 won until the first half of next year," and predicted, "Korea's long-term interest rates are expected to rise reflecting the possibility of increased government spending and expanded issuance of government bonds through supplementary budgets in the second half of next year, and then stabilize."

He also mentioned, "The KOSPI's full-fledged rise is expected to be from the end of the first quarter to the beginning of the second quarter, after the market has additionally reflected the Trump administration's executive orders, U.S. interest rate hikes, dollar strength, and downward adjustments in corporate earnings estimates," and said, "In the short term, Korean domestic demand stocks and small and mid-cap stocks, which have price merit, are promising."

Roh Jeong-dong, Hankyung.com reporter dong2@hankyung.com