I’m Lee Kyung-min, in charge of investment strategy at Daishin Securities.

Here’s a summary of today’s comments.

1. The global stock market’s rebound is slowing down. The impact of short-term fatigue and increased overheating burdens caused by a surge for three consecutive weeks. It is inevitable that short-term volatility will increase. I think it’s another buying opportunity. Time to take a step backward for this advancement
2. Retreating expectations for a rate cut, which has been the main driver of the recent sharp rebound. The market expects to cut interest rates by 100 basis points in 24 years starting with a rate cut in May. After the release of the FOMC minutes, they began to recognize that expectations for a rate cut were somewhat excessive. For the time being, fluctuations are inevitable due to changes in the consensus of interest rate cuts
3. Mid-term and short-term macro-risk indexes reach a low point. This suggests that the Risk On signal is in the apex. VIX also hit a new low of 12.46% since January 2020. Section where volatility indicators are more likely to rebound than further volatility decline. The technical indicators of the U.S. stock market, MACD OSC and Stochistics, are in the process of diversifying. The part that shows the market’s upward energy is weakening
4. The KOSPI is also on the rise and fall around the 2,500-point range. The KOSPI 2,500 points and 2,520 points are the 200-day trend and the 120-day moving average, respectively. Just like the U.S. stock market, there is a downward divergence in technical indicators. Short-term fluctuations in global stock markets, including KOSPI, are inevitable in early and mid-week
5. Amid the continued U.S. price stability and economic slowdown, a seesaw game between economic instability and expectations for a rate cut is inevitable depending on the results of economic indicators. The key to the US’s Bad Is Good phase is expected to cut interest rates. I think there is still a big gap between market expectations and the Fed’s stance. Only when expectations for a rate cut fall further can the U.S. Bad Is Good phase develop once again
6. If global stock markets, including KOSPI, are exposed to short-term volatility in early and mid-week, they will use it as an opportunity to expand their weight. There is a high possibility that the Good Is Good phase between China and Korea will develop later in the week. Fundamental momentum is expected to hold back stock markets shaken by investor sentiment and give momentum to the resumption of gains
7. KOSPI is expected to gain support around 2,450 points. A strategy to refrain from pursuing purchases around the KOSPI 2,500 level and increase the proportion as it approaches the 2,450 level. This means that we have to delay the timing of the purchase for a while, and switch to a buying strategy when adjusting. This week’s short-term volatility is a significant opportunity for the 23-year end
8. Short-term trading: Among the industries located in the undervalued area in terms of price, growth stocks, especially those with a high proportion of short selling, are concentrated. There are IT home appliances, chemicals, machinery, and shipbuilding, and KOSDAQ secondary battery-related stocks are also included
9. Medium-term investment strategy: Maintaining an opinion of increasing the proportion of semiconductor, automobile, and Internet industries, which have been mentioned as promising industries. 12-month EPS rise & foreign supply/demand still strong. Securities, banks also improved recently

KOSPI’s rebound from the 2,500 mark has slowed. I think it’s time to take a break.

I think this is a step backward for progress. In order for a frog to run further, it has to shrink once, right?

As I said last week, I think we need to be cool this week as well.

That doesn’t mean you’re not letting go, but if there’s an adjustment, you have to buy it.

Looking at the recent market fluctuations and investor sentiment…

Many people think that if it goes up, it will go up more, and if it goes down, it will be pushed back more.

I think this is the time to buy and sell as opposed to this sentiment. Be careful when you go up, and respond more actively when you get off…

There are many charts related to psychological and technical analysis, so it would be good to go to the data link and take a look.

The global stock market’s rebound continued for four weeks. However, the upward elasticity has weakened

It is attributed to the increase in short-term fatigue and overheating burdens caused by the surge for three consecutive weeks. Increasing short-term volatility is inevitable. I think this is likely to be a short-term adjustment in the upward process that develops after the low point at the end of October. It is necessary to extinguish short-term sales and relieve overheating, and the upward trend will not be dampened. For investors, I think it’s another buying opportunity.

There are times when a step backward is needed for this advancement. I think this week will be like that.

For now, expectations for a rate cut, which has been the main driver of the recent sharp rebound, have been retreating. Expectations for rate cuts fell to 47% and 70% in the FOMC in May and June, which once reached 65% and 89%. The Fed is not discussing a rate cut, but the market has been expecting a rate cut of 100 basis points in 24 years, starting with a rate cut in May. After the release of the FOMC minutes, I think we have begun to recognize that expectations for a rate cut are somewhat excessive. For the time being, fluctuations are inevitable due to changes in the consensus of interest rate cuts.

At the same time, the mid- and short-term macro-risk indexes have reached the low point. The medium-term macro-risk index is below 0.1, and the short-term macro-risk index is below 0.2. This is the part that suggests that the Risk On signal is at its peak.

VIX also hit a new low of 12.46 percent since January 2020. We have entered a section where volatility indicators are more likely to rebound than further volatility declines.

Technological indicators of the U.S. stock market, MACD OSC and Stochastic, are undergoing a downward diversion. It refers to a phenomenon in which the high point of technical indicators decreases despite the rebound of the index. This is a part that shows that the rising energy of the market is weakening. As the alignment of the moving averages strengthens, the upward trend is solid. However, I think it is time to keep in mind the possibility of expanding short-term volatility.

KOSPI is also fluctuating around 2,500 lines. At the KOSPI 2,500 and 2,520, there is a trend line of 200 days and a 120-day moving average line of the race line. Like the U.S. stock market, there is a downward divergence in technical indicators. It is a burdensome situation to settle down at the 2,500 line and head toward the 2,600 line right away. I think short-term fluctuations in global stock markets, including KOSPI, are inevitable in the early and mid-week of this week.

On the 29th of this week, the U.S. Conference Board Consumer Expectations Index for November will be released. Consensus is forming at 101, down slightly from 102.6 in October.
In the process of confirming weaker-than-expected Black Friday sales, worsening consumer sentiment could stimulate anxiety in financial markets.

Personal income and consumption in October, which will be released on the 30th, are expected to increase 0.2% month-on-month, respectively. The figures are slower than September’s income of +0.3% and consumption of +0.7%, but you’ll still see the consumption/income indicators are solid. The U.S. economy continues to slow, mainly in consumption and services. However, the speed is slow and slow. Expectations for excessive rate cuts are likely to retreat once more.

Meanwhile, PCE prices are expected to slow in October compared to September, with PCE prices rising 3.1% year-on-year and Core PCE rising 3.5%. As CPI surprise momentum has already been introduced, it will be difficult to re-stimulate expectations for interest rate cuts unless the results are significantly below expectations.

While price stability and economic slowdown continue, a seesaw game between economic instability and interest rate cut expectations is inevitable depending on the results of economic indicators. At this point, we are largely aware of the economic slowdown, but disappointment due to still high expectations for the economy can lead to recession concerns.

Meanwhile, the key to the US’s Bad Is Good phase was the expectation of a rate cut. The Fed’s stance is still drawing a line on interest rate cuts. There is still a large gap between market expectations and the Fed’s stance. I think that the US’s Bad Is Good phase can develop once again only when expectations for a rate cut fall further. Or the Fed’s stance should change… I think it’s a difficult situation to expect this.

If the global stock market, including KOSPI, is exposed to short-term volatility in the early and mid-week, it should be used as an opportunity to increase its weight. This is because there is a high possibility that the Good Is Good phase between China and Korea will develop later in the week. We expect that fundamental momentum will hold back the stock market, which has been shaken by investor sentiment, and will again be a driving force for the resumption of the upward trend.

On the 30th and December 1st, China’s November Statistics Bureau, Caixin PMI, will be announced. The statistics bureau’s manufacturing and non-manufacturing PMIs were 49.6 and 51.1 in November, respectively, showing an improvement from October (49.5 in manufacturing and 50.6 in non-manufacturing). November’s Caixin PMI was 49.3, down from October (49.3), and is expected to slow for the third straight month.

Although it can be seen as a somewhat mixed result, it is expected to confirm that China’s economic recovery is valid. Of course, if it is weaker than expected, growing anxiety about the Chinese economy could lead to a weak yuan, a weak won, and instability in supply and demand on the Korean stock market. In this case, the KOSPI’s short-term fluctuations could be a little longer.

Meanwhile, South Korea’s October mining industry production, which will be released on November 30, is likely to improve to 5.9% year-on-year. The improvement is expected to expand from September (3%), which turned upward for the first time in 12 months. In addition, South Korea’s November exports, which will be released on Dec. 1, grew 5.7 percent year-on-year, and are expected to increase for the second consecutive month.

The fact that the average daily export amount is only $2.16 billion as of the 20th is something to be wary of. It can be seen as a seasonal effect, but the result of returning to the August level is burdensome. This means that favorable momentum due to improved export momentum can be halved.

In particular, semiconductor exports are likely to turn positive in 16 months. On the 20th, semiconductor exports increased 2.4% year-on-year. The semiconductor-led manufacturing industry and the clear improvement in exports are expected to help the KOSPI rebound.

This is because if the base effect is removed, the recovery of Korean exports can be seen as slow. It is necessary to check the average daily export amount along with the export momentum to be released on December 1st. If export momentum improves for 2 consecutive months and solid export volumes are confirmed, KOSPI rebounding momentum