No 'Santa Rally'... Stocks "Continue Trump 2nd Term Risk" [Weekly Outlook]

NH, KOSPI Weekly Expectation 2430~2550

"Trump Selection, Possibility of Continuing 2nd Term Risk"

US Key Economic Indicators and Fed Scheduled for Attention

Last week, the KOSPI index fell below the 2500 line again. After struggling to hold the 2500 line throughout the week, it fell to the 2400 line on the last trading day of November, the 29th, with a drop of about 2%. This week (December 2-6), the stock market is expected to be pressured by external policies of the Trump administration, potentially falling to the 2430 line. However, the point that the Fed's dovish stance has eased geopolitical risks is a factor for investor sentiment recovery.

On the 1st, NH Investment & Securities Research Center predicted the expected fluctuation range of the KOSPI this week to be 2430~2550. The KOSPI closing price on the previous trading day, the 29th, was 2455.91.

The global trade war concerns have intensified with the re-election of former US President Trump, and the stock market is in a state of flux. In this situation, the domestic stock market has also been affected by individual and institutional investors selling 369.6 billion won and 977.6 billion won respectively, while foreigners net sold 1.7199 trillion won.

The Trump 2nd term agenda is being rapidly decided with a focus on figures with strong loyalty to the Trump administration. Rather than sector-specific expertise, the core of the 2nd term agenda is to efficiently implement the policies pursued by the president in each department. However, this agenda selection was decided unilaterally by the Trump administration without consultation with Congress. This agenda selection does not imply strong support from the entire Republican Party for the extreme pledge of the Trump administration.

Kim Young-hwan, a researcher at NH Investment & Securities, said, "The speed of implementation will be fast in the case of policies that can be executed by administrative orders (origin verification, illegal immigrant crackdown, North Korea-US war end, government budget and personnel reduction, etc.), but in the case of policies that require new legislation (IRA amendment, Dodd-Frank Act repeal, high-yield bond tax exemption, etc.), it may take time."

On the other hand, the ceasefire between Israel and Hezbollah has been a boon to the stock market. On the 27th, Israel and Lebanon's Hezbollah agreed to a 60-day ceasefire. Palestine's Hamas also announced that it is preparing to agree to a ceasefire with Israel, putting the Middle East geopolitical risk on a stable footing.

The domestic stock market is expected to seek investment opportunities in sectors other than the US. The Trump cabinet selection is judged to have a high possibility of continuing the Trump 2nd term risk, such as trade conflicts. Kim, a researcher, said, "It is good to pay attention to the Central Economic Work Conference in China in December, year-end dividends, etc." Meanwhile, the domestic focus sectors were suggested as telecommunications, internet, construction, entertainment, and pharmaceuticals.

This week's major domestic and international schedules (Korean time) include Korea's November export trends (1st), Eurozone November S&P Global Manufacturing PMI (2nd), US November S&P Global Manufacturing PMI (2nd), US November ISM Manufacturing (3rd), Korea November consumer prices (3rd), China's November Caixin Services PMI (2nd), Eurozone November S&P Global Services PMI (2nd), US November S&P Global Services PMI (2nd), US November ISM Non-Manufacturing (5th), US Fed Beige Book release (5th), Korea Q3 GDP (5th), US November employment report (6th), US December preliminary consumer sentiment index (7th), etc.

In order, the Fed officials' speeches scheduled include Christopher Waller Fed Vice Chair (3rd), John Williams New York Fed President (3rd), Jerome Powell Fed Chair (5th), Michelle Bowman Fed Governor (6th), Mary Daly San Francisco Fed President (7th), etc.

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com