"Trump Tariffs May Cause Market Adjustment... Avoid for 1-2 Weeks" - Meritz
- Meritz Securities advised that "Trump tariffs could be a short-term adjustment factor."
- Researcher Hwang Su-wook emphasized that the S&P500 index could adjust from -3% to -10% based on experience.
- He noted that during such times, the Utilities sector had low volatility.
- The article was summarized using an artificial intelligence-based language model.
- Due to the nature of the technology, key content in the text may be excluded or different from the facts.
Meritz Securities advised on the 3rd that the announcement of tariffs by the second Trump administration on Mexico, Canada, and China is a "short-term tactical macro event that requires caution."
Hwang Su-wook, a researcher at this securities firm, explained, "President Donald Trump announced tariff measures against Mexico, Canada, and China," adding, "The measures include an additional 25% tariff on Mexico, a 10% tariff on China, and a 10% lower tariff on Canadian energy resources."
He further elaborated, "The justification for the tariffs is that the immigrant threat constitutes a national emergency, and they will be implemented until this crisis is resolved. There is a retaliatory clause that allows for further tariff increases if the counterpart countries take countermeasures against the United States, and these countries are preparing to respond."
He noted, "The invocation of 'Section 201 Safeguard' of the Trade Act on January 22, 2018, marked the beginning of the trade dispute, and stock adjustments due to the trade dispute continued until the first U.S.-China trade agreement in December 2019," adding, "The adjustments lasted from as short as two weeks to as long as two months, with the adjustment range appearing from -3% to -10% based on the S&P500."
He also recalled, "By sector, those that had risen significantly fell significantly, with IT, Consumer Discretionary, Healthcare, and Utilities, which outperformed the market in 2018-2019, experiencing significant adjustments in almost all cases except for Utilities," adding, "The Utilities sector outperformed the market with the least volatility during the trade dispute period."
He added, "The reason tariffs are problematic is that they are an unpredictable inflationary factor, and real indicators scheduled from early to mid-February could stimulate inflation concerns, acting as a market adjustment factor," advising, "It is a period to avoid for 1-2 weeks."
Noh Jeong-dong, Hankyung.com reporter dong2@hankyung.com

Korea Economic Daily

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