R's Trading Station (0904 Fri)

The central judgment in this broadcast is that interest rates and FX, rather than the stock market itself, are more likely to determine the market's future direction. The KOSPI fluctuated around its 21 day moving average for 3 weeks and avoided falling below 6,500, but technical pressure remained because its 5 day moving average declined and it failed to break through resistance. The KOSDAQ failed to regain its 120 week moving average, and the absence of policy support and weak market flows left open the possibility of a further move toward 700. The won–dollar exchange rate fell to 1,351 won, and a stronger won could reduce exporters' profits when translated into won. However, the speaker explained that market supply and demand and participants under pressure to trade, rather than fundamentals, determine the short-term direction. The most important educational topic was forward interest rates: the reasoning was that spot rates and the yield curve across maturities incorporate expectations of future interest rates, and that steepening, flattening, and inversion respectively reflect expectations of rising, stable, and falling rates. Concerned about upward pressure on long-term rates, FX volatility, and events in mid-September (month 9), the speaker concluded with a conservative stance, withdrawing the existing plan to buy in September (month 9) and watching October (month 10) more closely.