Evaluations are cautiously emerging that the 'Trump risk' that has been shaking global stock markets is passing its peak. This is because the price of Government Bonds in the United States has plummeted, dulling the sharp blade of U.S. President Donald Trump's threats against trading partners using high tariffs.
The fluctuations in the stock market, which had surged or dropped by more than 5% in a single day, are showing signs of stabilization. Of course, it is important to keep in mind that the unpredictable President Trump may pull another card at any moment, but the securities industry anticipates that a stock market situation will continue in the short term.
It remains to be seen how the U.S. tariff policy will be finalized. On the 14th (local time), the U.S. announced that it would preview tariffs on specific items like semiconductors and other electronic products.
However, as the volatility of exchange rates and interest rates increases, the burden on the United States has also grown. The volatility of exchange rates and interest rates appeared as a side effect of Trump's policy implementation. The United States is also aware of situations such as dollar weakness and is likely to be attentive to ensure that volatility does not widen further. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, noted on the 11th (local time) that 'the recent weakness of the dollar indicates that investors' preferences for the United States are changing,' pointing out that the perception of the dollar as a 'safe asset' has changed compared to the past.
There is also a possibility that China will cooperate with other countries to counter pressure from the United States. Experts believe that in this case, the intensity of the U.S. tariff policy is unlikely to increase beyond the current level.
The foreign investor flow in the South Korean stock market also suggests that Trump’s tariff risk has passed its peak. Foreign investors sold more than 10 trillion won worth of domestic stocks over the past two weeks (from March 31 to April 14), but unlike the net selling of over 5 trillion won in just three trading days from April 3 to 7, the recent three trading days (from April 9 to 11) saw a limited net selling of 1.3 trillion won.
The possibility of aggressive selling pressure re-emerging, which was seen at the end of March and early April, is limited. Expectations have also emerged that, as uncertainties regarding tariffs and the exchange rate of the Korean won against the U.S. dollar diminish in the future, foreign capital flows may turn into net buying.
The fact that macro uncertainty has passed its peak suggests that there is a high likelihood of a stock market rally as policy risks diminish. In particular, during this month’s earnings announcement season for the first quarter, individual corporations' profit momentum may become important.
Jungdawn, a researcher at LS SECURITIES, said, 'The specifics of the tariff policy and its impact on related earnings need to be clarified, but this will inevitably take more time,' adding, 'Until then, the stock market will continue.'
Researcher Jung suggested 10 stocks expected to have promising earnings announcements in the first quarter this year: Hanwha Ocean, KRAFTON, SK Telecom, POSCO FUTURE M, Amorepacific Corporation, PharmaResearch, APR, Emart, Kolmar Korea, and Daewoo E&C.