Here’s a breakdown of the provided text, focusing on the key points and themes:
Overall Market Performance:
KOSPI: the KOSPI index experienced a slowdown, ending at 2139.76 after starting at 2146.79.
Foreign Investors: Bought 441.5 billion won.
Individuals: Sold 441.5 billion won.
KOSDAQ: The KOSDAQ index also showed a slowdown, closing at 806.95 after opening at 820.67. Individuals: Bought 394.5 billion won.
Foreigners: Sold 64.1 billion won.
Institutions: Sold 3978 billion won.
Key Factors Influencing the Market:
High Stakes: The market is closely watching the outcome of these negotiations, especially with the US threatening a 25% tariff on August 1st.
Impact on manufacturing: the text emphasizes that effective tariff measures would negatively impact South Korea’s manufacturing sector, a key growth engine.
Positive Signs: The US’s recent trade agreements with the EU and Japan are increasing expectations for a positive outcome in the US-ROK negotiations.
Diplomatic Efforts: The planned meeting between South Korean Deputy Prime Minister Gu Yoon-cheol and US Treasury Secretary Scott Becent (and potentially US Secretary of state Rubio) is seen as a crucial step.
- Domestic Tax Reform Plans:
Corporate Tax Increase: The government is reportedly considering increasing corporate tax rates from 24% to 25%, reversing previous tax cuts.
Dividend Income Separation: Measures are being designed to minimize controversy around “rich tax cuts” by adjusting dividend income separation.
Negative Impact: An increase in corporate taxes and stricter transfer tax requirements are seen as factors that could restrict the upside potential of the domestic stock market.
- Federal Open Market Committee (FOMC) Meeting:
Interest Rate Freeze expected: The FOMC meeting on July 29-30 is expected to result in a freeze of the policy rate (currently 4.25-4.50%), with a 95.9% probability according to the Chicago Product Exchange (CME).
Expert Opinions and Outlook:
Positive Outlook (with caveats):
Government Policy: Securities firms believe that continued government efforts to revitalize capital markets will be beneficial for KOSPI.
Increased Investor Confidence: A long-term focus on revitalizing the capital market is expected to boost investor confidence and lead to a gradual rise in KOSPI.
Challenges and Concerns:
“Korea Discount”: To reach a KOSPI of 5000, the “Korea Discount” (undervaluation of domestic stocks) needs to be normalized.
Corporate Profitability: Companies need to improve their profit-generating ability and establish their EPS (earnings per share) capabilities.
Fiscal Deficit: The government’s fiscal spending creates a considerable financial deficit burden. Treasury Stock Incineration: It’s not easy for corporate management to engage in treasury stock incineration. Government’s Policy Goal: the text suggests the government’s policy goal might not solely be about the stock market’s rise.
the South Korean stock market is navigating a complex landscape influenced by international trade negotiations,domestic tax policy,and global monetary policy. While there are positive expectations stemming from diplomatic efforts and potential government support for capital markets, significant challenges remain in addressing the “Korea Discount” and improving corporate fundamentals.
