[비즈한국] “I should have just sold my Samsung Electronics005930 when I was down 200,000 won. Now, I’m down 2 million won.” With the KOSPI and global stock markets plummeting day after day, investors’ concerns are deepening. The sharp decline across global financial markets is driven by fears of a U.S. economic recession triggered by negative employment data.
On the 1st, the employment sub-index of the U.S. Institute for Supply Management (ISM) manufacturing PMI for July hit 43.4, the lowest level since the COVID-19 pandemic, while weekly jobless claims reached 249,000, surpassing the previous week's 235,000. Subsequently, the U.S. Department of Labor's July employment report showed an unemployment rate of 4.3%, the highest in about three years. This reinforced the belief that the labor market is set to deteriorate. Kim Chan-hee, a researcher at Shinhan Securities, noted, “After the July FOMC meeting mentioned a greater focus on employment conditions, the shock from the ISM manufacturing index followed by the employment data has deepened recession fears,” while adding, “We need to verify data for an additional one to two months rather than concluding that employment is rapidly cooling.” Lee Ha-yeon, a researcher at Daishin Securities, also stated, “It is a stretch to judge an economic recession based on a single employment report,” adding, “While it is true that employment growth is slowing, it was also influenced by temporary factors such as the aftermath of a hurricane in July and maintenance at Michigan factories.”
The KOSPI, which plunged over 3% on the 2nd, continued its downward trend with a drop of more than 5% on the 5th. Ultimately, a KOSPI sidecar was triggered that morning, as the KOSPI 200 futures price fell more than 5% from the reference price and sustained that level for one minute. The KOSDAQ also showed a sharp decline.
The securities industry is speculating that the U.S. Federal Reserve might pursue a “big cut” (a 0.5%p interest rate cut) in September. An increasing number of brokerage firms are forecasting two to three rate cuts by the Fed within the year. Min Byung-kyu, a researcher at Yuanta Securities, pointed out, “The market starting to anticipate a big cut rather than a gradual rate reduction is a clear reflection of concerns about the economy,” adding, “These changes are acting as a pretext for profit-taking, particularly in assets where valuation burdens have increased.”
Investors are worried about how far the market crash will go. The problem is the domestic stock market, which, unlike the U.S. and Japanese markets, had not seen a sharp rally previously. Heo Jae-hwan, a researcher at Eugene Investment & Securities, said, “Domestic export stocks still held up well during the first half of this year,” noting, “The slowdown in U.S. manufacturing indicators is a factor that shakes expectations for the performance of domestic export stocks.” Researcher Heo added, “Market bottoms usually appear when sentiment toward safe assets becomes excessive,” and suggested, “In the domestic stock market, it is necessary to limit interest to industries like utilities and shipbuilding that are holding up well amid recent market adjustments.”
Experts who suggest that the sharp declines in the KOSPI, SK Hynix000660, and Samsung Electronics are excessive still advise caution regarding volatility for the time being. Market wariness is likely to persist until it is confirmed whether the U.S. is truly in a recession. Researcher Lee Ha-yeon said, “While I see a high possibility of a turnaround in the August employment report, if the market’s expectations are not met, we must keep in mind the possibility that sentiment withered by recession fears could actually trigger a real recession.” She also advised monitoring whether recession concerns will spread to China, where recovery remains delayed.
As volatility is expected to be high for the time being, market gains may have to wait until policy momentum is reaffirmed after the U.S. presidential election. Kim Byung-yeon, a researcher at NH Investment & Securities, stated, “While the recent short-term market plunge will likely recover to some extent, it is inevitable that the stock market will remain in a lowered trading range or a downward trend until the U.S. presidential election.”
Meanwhile, it was reported on the 3rd that Berkshire Hathaway, led by Warren Buffett, sold 49% of its stake in Apple this year. This has sparked talk that Buffett may be concerned about Apple's growth potential or a potential recession. Park So-yeon, a researcher at Shinyoung Securities, reported, “It has been confirmed that a significant portion of the proceeds from the sale was moved into Treasury bills (T-bills) with maturities of less than one year,” adding, “As a result, Berkshire’s cash reserves have soared to a record high of $276.9 billion.” Researcher Park further anticipated, “I suspect expensive valuations were the reason behind this decision,” noting, “Recent AI bubble and recession fears are pulling the stock market down, and Berkshire’s sell-off will likely further dampen market sentiment.”