Stock market stagnant flow stuck in interest rate Until when weekly outlook

Photo = Getty Image Bank

The issue of rising market interest rates is holding back the stock market. Experts also disagree over the direction. Some experts argue that interest rates rising as the economy recovers will not be an obstacle to the stock market, while others point out that they should be wary because interest rates have risen due to market imbalances.

For the time being, there is a high possibility that the individual stock market will continue, and some advise that it is necessary to pay attention to stocks based on basic physical strength (fundamental).

Domestic and foreign stock markets moving sideways

According to the financial investment industry on the 21st, the KOSPI index last week ended at 3107.62, up 7.04 points (0.22%) from the previous week. The KOSPI is showing a frustrating trend around the 3100 line this month. The situation is similar for the KOSDAQ index. Last week, the KOSDAQ finished with 965.11, which moved about 1 point compared to the previous week.

The US stock market was mixed. On the New York Stock Exchange (NYSE) on the 19th (local time), the last trading day of last week, the Dow Jones 30 Industrial Average closed at 31,494.32, up 0.98 points (0.0%) from the previous trading day. The Standard & Poor’s (S&P) 500 index closed at 3906.71, down 7.26 points (0.19%) over the same period, while the Nasdaq index rose 9.11 points (0.07%) to 13,874.46. The Dow rose about 0.1% this week, the S&P 500 fell about 0.7% and the Nasdaq fell 1.6%.

The issue of rising interest rates that hit the stock market

The background of sluggish domestic and overseas stock markets is the issue of rising US Treasury yields. The 10-year U.S. Treasury bond yield, which started at 0.93% at the beginning of the year, immediately raised the level to 1%. Since then, it has risen gradually, and this month it has risen to the 1.1% level. On the 16th, it rose to 1.311% based on the closing price, and rose to the 1.3% level, and on the 17th, it rose sharply to 1.333% during the intraday.

The biggest factor is the anticipation of an economic recovery following the promotion of US stimulus measures. U.S. President Joe Biden is strongly pushing for additional stimulus measures worth $1.9 trillion (about 2100 trillion won). The rallying of commodity prices is also a factor boosting interest rates. West Texas crude oil (WTI) prices recently exceeded the $60 mark, and non-ferrous metals such as copper, an economically sensitive raw material, have hit the declared price.

Among experts, weight is weighed on the opinion that this rise in interest rates will not be a big problem for the stock market. Moon Nam-jung, a researcher at Daishin Securities, said, “There is no need to pay attention to the stock market anxiety brought about by the rise in US Treasury bond rates.”

However, there are also voices that they should be wary of rising interest rates. Park So-yeon, a researcher at Korea Investment & Securities, said, “The recent breakdown of the recent long-term interest rate rise at the International Financial Center showed that the expectation of an economic recovery was only 36%, and the increase due to the imbalance in the government bond market reached 64%. He pointed out that there is a need to be on the lookout for the time being, saying, “It means that the rise should not be taken only as inflation in the traditional sense, that is,’a good symbol of economic recovery.’

According to the Financial Supervisory Service on the 2nd, the net income and asset size of domestic asset management companies in the third quarter (July-September) reached record highs. (Photo = Getty Image Bank)

What is your investment strategy?… Market price forecast

Whatever the reason, it is true that the price burden of risky assets is increasing due to rising market interest rates. As bond rates rise, the gap between returns from stocks narrows. There is no need to take risks and buy stocks, so there is a reason for market capital to move.

In the market as well, as alert sentiment grows, it is predicted that the stock market will unfold rather than the index. It is explained that investment is necessary considering basic physical strength (fundamental). Lee Jae-seon, a researcher at Hana Financial Investment, said, “It is necessary to pay attention to software that increases the proportion of profits in KOSPI.”

Some are expecting strong economic sensibility stocks such as semiconductors and chemicals amid rising interest rates. However, as interest rates have soared rapidly and are showing signs of subsidence, it is expected that it will be difficult to establish itself as the leading stock. In addition, in terms of supply and demand, it is advised to pay attention to these stocks as funds can be directed to mid-cap and small-cap stocks.

Lee Song-ryul, reporter of Hankyung.com [email protected]