Moderate increases in inflation and interest rates are not negative for blue-chip companies, and gradual interest rate hikes favorably impact companies with strong pricing power and solid financial structures.
Want the next one from this channel too?
Economist Kim Han-jin sees a low probability of a sharp rise in interest rates in the short term, specifically until the end of October. However, from a long-term perspective, he predicts that market interest rates will continue to rise. He analyzes that this uptrend will persist given current economic conditions and trends. This will be an important consideration for investment strategy formulation.
Economist Kim Han-jin emphasized that whether economic indicators turn out better than expected is closely linked to US interest rate fluctuations. In particular, a direct proportional relationship is clearly observed, where market interest rates rise whenever the economic surprise index indicates stronger economic data. This co-movement can be used as an important clue to predict interest rate movements.
Economist Kim Han-jin expects economic sentiment to moderate between September and October, which will likely temper the rise in interest rates. He predicts that the US 10-year Treasury yield is likely to remain in a narrow range of 4.6% to 4.8%. While there is a possibility of temporarily falling below 4.5%, overall movement is expected to be within a limited range.
Economist Kim Han-jin explained that, in the long run, rising inflation and interest rates are not necessarily bad for blue-chip companies. This is because blue-chip companies have the capacity to grow their nominal profits above the rate of inflation. However, he warned that a sharp rise in interest rates or inflation could pose a significant risk factor for the overall stock market.
Ultimately, the market will favor companies with competitiveness and financial soundness, which will be an important criterion for constructing portfolios in the long term. This phenomenon goes beyond merely a defensive stance against interest rate hikes, suggesting the importance of selecting companies that can secure growth drivers amidst structural changes.
This could convey a message to the market that the Fed does not necessarily achieve tightening solely through policy rate hikes. By implying that a natural rise in market interest rates contributes to the Fed's tightening goals to some extent, it could provide hints about the future direction of monetary policy. As a result, the Fed will reconfirm its firm stance on curbing inflation while demonstrating flexibility in considering market conditions.
Such artificial intervention can undermine market confidence and lead to unexpected side effects, thus attempts by the Treasury to intervene in interest rates are issues that need to be approached cautiously.
Even if mentioned, it is expected that very subtle and cautious wording will be used. The Fed, as an independent monetary policy institution, will seek to avoid being caught up in political controversy, and this will influence its communication with the market.
The Fed may also make official remarks about this phenomenon. This could be an important signal to the market regarding the Fed's monetary policy stance and serve as a reference point for gauging the end of the future rate hike cycle.
Consequently, AI-related industries are expected to maintain long-term growth with relatively less impact from interest rate volatility. Companies still have strong incentives for the development and expansion of artificial intelligence technology, which will drive the revitalization of the entire related industrial ecosystem.
I believe that there will not be a drastic reduction in CAPEX that we would tangibly feel.
Therefore, it is time for investors to pay more attention to the improvement of corporate earnings rather than the Fed's words. Strong corporate earnings will be a key driver that can lead to stock market gains despite interest rate volatility.
This indicates that corporate fundamentals are improving, which is an important factor supporting the overall health of the market. Expectations of improved earnings can boost investor sentiment and drive stock price increases.
This suggests that despite recent stock price increases, the market is not overheated when compared to long-term historical averages. Therefore, current valuations can be considered a reasonable level that supports continued market growth.
Answers come from the transcript, with the exact spot cited.
Want the next one from this channel too?
When 삼프로TV 3PROTV publishes, we'll write it up like the one you just read and email it to you.
{channel} published 90 in the last 7 days.
We skip Shorts. You can unfollow any time.
