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Global stock market conditions and outlook in the second half of 2023

Global stock market trends in the first half

The stock price recovered at a faster-than-expected pace due to the improvement of the US economy and the growth prospects of the IT industry (+12.9% from January 1st to June 30th)

The main cause of stock price rise

Rise in stock market valuation (+12% based on P/E) 🌐 Second half outlook: Disinflation and a moderate economic slowdown will continue, but the stock price’s ability to rise is likely to be limited due to valuation burdens.

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competition cycle

It is highly likely that the slowdown and decline in economic growth centered on developed countries will proceed at a moderate level.

corporate profit

Corporate profits are expected to be sluggish due to the burden of operating and procurement costs, but earnings growth is expected to bottom out and recover next year, led by companies with large market caps.

valuation

Upside potential appears limited due to valuation pressures and reduced risk premiums.

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Second half stock market outlook

After a surge in stock prices in the first half of the year, it is expected to turn into a rebound after correction in the second half. Volatility in the stock market as a whole is expected to rise slightly.

key variable

Big tech-led corporate performance recovery, geopolitical risk and supply chain reorganization acceleration, long-term high interest rate and debt risk are expected to act as major variables.

stock price outlook

We expect a correction centered on developed countries in the second half of the year due to further reduction in upside potential after the stock market growth in the first half. However, our target price has recently been shifting upwards.

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High possibility of earnings recovery led by big tech

We believe large-cap growth stocks are highly likely to drive corporate earnings recovery thanks to the AI ​​industry with bright prospects for cash-generating capacity and structural growth, as well as falling interest rates and a weak dollar.

Geopolitical risks and reshaping supply chains

Amid deepening tensions between the two countries, the reorganization of global supply chains for the United States and its ruling countries is also expected to accelerate.

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aftermath of high interest rates

Deteriorating credit conditions have also raised issues such as lack of liquidity at financial institutions, increasing corporate financing burden, and increased risk of bankruptcies.

overall rating

In the second half of the year, stock price volatility is expected to increase relatively due to limited upside potential in the global stock market, corporate profit growth passing through a trough, and valuation burdens diverging.