Should You "Sell in May and Go Away"? Retail Investors Worry After a Record-Breaking Rally [Weekend Money]

IBK Investment & Securities: "Short-term Surge in April May Lead to Correction in May"

Additional Buying Strategy Effective If Market Pulls Back

On April 28, when the KOSPI surged past the 6700 mark during the session, an employee is monitoring the stock market and exchange rates at the dealing room of the Hana Bank headquarters in Jung-gu, Seoul. 2026.4.28 Photo by Jo Yongjun

IBK Investment & Securities has forecasted that the Korean stock market could undergo some correction in May following the sharp rally seen in April.

On May 1, Byun Junho, an analyst at IBK Investment & Securities, explained, "The KOSPI surged nearly 30% in April, which has increased technical pressure. As a result, the market will enter May carrying this technical burden."

Byun also noted, "Market participants may also take into account the typical 'Sell in May' seasonality effect, which could lead to a pronounced wait-and-see stance."

According to IBK Investment & Securities, the KOSPI's 31% monthly gain in April marks the highest monthly increase since January 1998. The KOSPI rose significantly, despite the Iranian crisis not being clearly resolved, driven by hopes for a resolution and strong first-quarter corporate earnings.

Byun analyzed, "'Sell in May' is a statistically significant stock market pattern. The slowdown in KOSPI's upward momentum from May through autumn is not merely a coincidence. It is the result of several factors, including the gradual decline of liquidity inflows at the beginning of the year, price pressure following stock price rallies at the turn of the year, and weakening earnings sentiment as the year progresses into the second half."

He added, "Since 2000, the actual average KOSPI change in May has been only 0.3%, which is quite low, and the average change from May to October is significantly weaker than in autumn and winter. Therefore, there is a possibility of profit-taking in early May in anticipation of this trend."

However, he pointed out, "In years when the KOSPI surged by more than 5% in April, there has never been a case where it declined in May. This indicates that when the April market reflected strong first-quarter earnings, the 'Sell in May' phenomenon did not immediately emerge."

He continued, "As the impact of strong first-quarter earnings is usually linked to full-year expectations, the rationale for profit-taking in May is weakened. In addition, since expectations for semiconductor earnings are likely to continue into the second quarter and beyond, a strategy of buying on dips during technical pullbacks in early to mid-May could prove more effective."

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