From Bitcoin to Gold, Global 'Everything Rally'... Only KOSPI Faces '-8%' Humiliation

Hankook Kyungjae-NH Investment & Securities, 17 Asset Classes Yield Analysis

'When Gold Rises, Dollar Falls' Rule Broken

US Economy Boom Boosts Dollar Index by 6%

Emerging Markets Buy Gold to Reduce Dollar Dependence

Korean Stock Market Hit by 'Samsung Electronics Slump'

Doubts on HBM Competitiveness … Foreigners 'Sell'

Export and Domestic Demand Slump Amid Impeachment Turmoil

Trump's High Tariffs and High Exchange Rates Add Burden

"Rebound Expected if Undervaluation Attracts Attention"

'The dollar rises, gold prices fall.' 'When safe assets rise, risky assets fall.'

It was a year when the traditional logic that had been prevalent in the financial market for decades collapsed. Safe asset gold and risky asset Bitcoin, along with US stocks, rallied together, and the dollar value continued to soar, creating an 'everything rally.' However, Korean stocks instead inflicted over 8% losses on investors.

○ Bitcoin, Gold, and Dollar Rally Together

According to CoinMarketCap on the 23rd, Bitcoin, which was hovering around $40,000 to $50,000 at the beginning of the year, surpassed $100,000 for the first time on the 5th. As of the 19th of this month, Bitcoin's annual increase rate reached 129.67%. Donald Trump's election as President of the United States had a significant impact. President-elect Trump announced throughout the election campaign that he would actively foster the virtual asset industry and ease regulations. In particular, the US administration promised to strategically stockpile Bitcoin. Hong Chun-wook, CEO of Prism Investment Advisory, said, "Due to the great uncertainty about the policies that the Trump administration will implement, global funds are flocking even to Trump's small remarks."

The second-highest yield was gold (24.87%) in physical form. Gold and the dollar have recorded an inverse correlation over the past decade. Most commodities, including gold, are traded in dollars, so when the dollar depreciates, the price of commodities denominated in dollars rises. However, this year, the dollar index rose by 6%, supported by the strong US economy, while gold also rose significantly. This is because the structural demand for gold has increased significantly. As the US weaponized dollar assets against Russia, emerging market central banks bought gold in large quantities to reduce dollar dependence. Geopolitical instability such as Middle East conflicts and the Russia-Ukraine war, and expectations of interest rate cuts by major central banks have stimulated gold prices throughout the year.

The US S&P 500 index rose by 23%, ranking third in yield. Big tech companies leading the fourth industrial revolution, such as Alphabet, NVIDIA, and Tesla, were hotter than ever. The steady boom in the US economy also supported the stock market rally. Kim Hak-kyun, head of the research center at Shinyoung Securities, explained, "The US's policy of prioritizing domestic industries, such as attracting traditional manufacturing like semiconductors to the US, also contributed to boosting the US stock market and economy."

○ KOSPI Yield Worse Than Regular Deposit

Only three major asset classes recorded negative yields this year. The yield of global REITs (S&P Global REITs) was -0.48%. This was due to the high level of US Treasury yields maintained by the solid US economy and President-elect Trump's economic policies. The price of crude oil (West Texas Intermediate) also fell by 2.43% compared to the beginning of the year due to weak demand from China and oversupply forecasts.

Among them, the lowest yield was recorded by the Korean KOSPI index. It fell by 8.26% this year. It yielded worse than a one-year regular deposit (3.65%). The rapid withdrawal of foreign investors from the domestic stock market was significant. The stock prices of battery companies plummeted due to the electric vehicle chasm (temporary demand slowdown), and Samsung Electronics, the largest market cap, fell short of expectations in HBM technology competitiveness, causing it to backtrack. Since August, foreigners have sold 20.873 trillion won worth of Samsung Electronics. During the same period, the stock price plummeted by 36%.

Since July, Trump's high-intensity tariff policy has also emerged, steepening the decline of the domestic stock market, which is mainly composed of export companies. The gap between the Korean economy, which is in a slump in both exports and domestic demand, and the hot US economy widened, pushing the won-dollar exchange rate above 1,400 won, and the speed of foreign investors' exit from the domestic stock market accelerated. As individual investors, who used to buy at low prices whenever the index fell, also left for the US stock market, which offers high returns, the supply and demand became rapidly thin. At the beginning of this month, the Korea Discount phenomenon intensified as President Yoon Suk-yeol's martial law declaration and impeachment turmoil overlapped. Kim, the head of the center, said, "The Korean stock market, with a price-to-book ratio (PBR) falling to 0.85 times, has entered a historically undervalued phase," adding, "Although it is difficult to find a suitable good news for the time being, the low price may be highlighted, and the rebound timing may come unexpectedly quickly."

Reporter Shim Sung-mi smshim@hankyung.com

Reporter Lee Si-eun see@hankyung.com