[Focus] rising interest rates ... What is the strategy for the stock market, which is growing anxiously?

[Focus] rising interest rates ... What is the strategy for the stock market, which is growing anxiously?

Treasury bond yields are rising (bond price decline) is steep. The US is likely to raise interest rates in March.

In the aftermath of this, interest rates on treasury bonds in major countries such as the US have increased.

The atmosphere in the domestic bond market is similar.

Stock market experts advised that it is time to prepare for a full-scale rise in interest rates.

◆ Treasury bond yield rises

The KOSPI index fell 40.95 points (1.59 percent) to close at 2,527.59 as of 11:15 am on the second day.

The index began to decline in the 2560s.

The overnight index was mixed with the rise in US long-term government bond yields.

Although corporate earnings have recently surpassed market consensus and led the index to rise, the rise in government bond yields had a negative impact on investment sentiment.

"The global interest rate has jumped sharply since the beginning of the year," said Kim Soo-yeon, a researcher at Hanhwa Investment & Securities. "Korea's gained 0.30 percentage points from the 10-year government bond yield, 0.32 percentage points, and Japan also jumped 0.04 percentage points to 0.1 percent. "

Since the end of last year, global interest rates have risen sharply, and 10-year interest rates in the US, Korea and Germany are the highest since 2014-2015.

Kim said, "While the central banks of major economies have maintained the policy rate, the economic growth momentum of these countries is still flowing in a positive direction, reflecting the market's expectation that there is little time to switch to tightening."

The Fed's confidence in inflation outlook is adding to its interest rate hike.

The Fed is pushing for a rate hike based on confidence that inflationary pressures will further escalate in the wake of rising international oil prices as the economic recovery continues.

The market is expected to raise interest rates at least three times this year, including March. Treasury bond yields are expected to continue to climb further.

◆ Stronger stock market sentiment

As interest rates on government bonds rise, so is the stock market.

The higher the interest rate, the more money can be transferred from the risky assets to the government bonds.

If the rise in government bond yields leads to a rise in corporate bond yields, corporate financing costs will rise.

There is a possibility that the company's earnings, which have been financed cheaply, may deteriorate.

On the 29th (local time), the 10-year US Treasury bond rate hit 2.7 percent in the first half of the year.

On the day of the New York stock market, the major indexes fell all at once.

In particular, the Dow Jones Industrial Average dropped to its highest level this year.

In the aftermath, the Korean stock market also fell.

"The stock market has begun to respond to concerns that the 10-year US interest rate has exceeded 2.7 percent," said Hetero, a researcher at Samsung Securities. "It is time for us to adjust to changes in interest rates," he said.

"If the interest rate rises sharply, the credit cycle may shrink," said Jeongdae Meritz, a researcher at the Korea Deposit Insurance Corporation. "One of the things that has improved the global economy is the expansion of the private credit cycle. "He said.

Yuanta Securities said it was time for the stock market to decline due to the rise in interest rates when the 10-year US interest rate would be 3%.

◆ "Observe industrial materials"

It was advised that stock investors should also start a new investment strategy when the interest rate rises.

Even when the interest rate rises, it is advisable to select industries that are attracted to share prices. Experts say they should pay attention to industrial materials.

As companies' future investment funding costs are higher than current ones, investment incentives will be incurred in advance of investment expenditures.

"The relative strength of the MSCI Global Stock Index (ACWI · All-Country World Index) industrial materials has also become stronger as the 10-year US Treasury bond is rising," said Cho Byung- We can confirm that the investment cycle will be accompanied by a recovery. "

Kiwoom Securities said investing in value stocks was a promising strategy for rising interest rates.

The reason is that undervalued value stocks are attracting attention as the attractiveness of investment stocks with high stock price ratios (PER) is falling relative to future stock prices.

Lee Sang-wook, a researcher at the brokerage firm, said, "Among stocks with low PERs, it means buying stocks with strong stock price momentum."