Potential loss of index direction due to rising interest rate pressure↑
“You should pay attention to investment-related industries such as materials and industrial goods”
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While stock market volatility is growing amid rising US Treasury yields, stock prices predicted that the KOSPI period adjustment will continue next month. The global economic recovery and improvement in earnings momentum are positive, but there is a strong possibility that the index will lose its direction due to the constant pressure on rising interest rates.
However, experts advised that the recent rise in interest rates is not due to monetary tightening, so excessive concerns need to be avoided. In addition, the most important factor in responding to the market is the adjustment of weight within the industry.
According to the financial investment industry on the 26th, the KOSPI band in March is expected to be around 2900-3200. For the time being, it is expected that the index will continue to fluctuate within that range.
Market participants are concerned that the stock market correction will take off in earnest. This is because if interest rates rise even faster due to inflationary pressures, the policy engine for stimulating the economy may weaken.
Kyobo Securities Research Center Director Kim Hyung-ryul said, “Compared to the intense atmosphere at the end of last year and the beginning of this year, the stock market ahead of March is calm.” “Although I expected the warm spring of liquidity to accelerate, I confirmed that nature’s order cannot be reversed. He diagnosed.
The recent rise in long-term government bond yields and widening short- and long-term interest rate spreads are believed to reflect the expectations of economic recovery rather than recovery of real economic activity.
Therefore, experts advised that it is a stagnation phase that started from a temporary liquidity balance problem, and that it is important to believe that the medium-term expansion phase can be maintained. It is analyzed that the normalization of economic sentiment and a cyclical economic recovery will improve earnings momentum.
The biggest concern in the future is how to respond in the stock market if the US interest rate rise continues. The stock market in March is a time when fundamentals (basic physical strength) improve in earnest thanks to earnings expectations, but it is important how investors will accept this.
Experts advise that the stock is not yet ready to sell. The uncertainty caused by rising interest rates is rising, but looking at the volatility index (VIX) or the financial stress index, there are no signs that the market will shake significantly.
In the financial investment industry, the US’ long-term interest rates are likely to rise gradually. This trend is expected to have an impact on the Korean interest rate, which substantially goes hand in hand with the US interest rate. This is the time for a response strategy that fits the gradual rise in interest rates.
Experts recommended that it is necessary to increase the proportion of industries that benefit from rising interest rates. The sectors corresponding to this are finance, industrial goods, materials, and IT.
Dae-Joon Kim, a researcher at Korea Investment & Securities, said, “We need a positive view on banks and insurance that reflects the rise in interest rates as a good thing. Considering that this increase in interest rates is the result of reflecting expectations for an economic recovery, it is also in investment-related industries such as materials and industrial goods. You need to pay attention,” he said.
Eunji Cha, reporter Hankyung.com [email protected]