[Market ING] KOSPI Recovers to 7,800 Level, Attempts to Settle at 8,000

Weekly KOSPI Expected Range: 7,200 to 8,500

Last week, the KOSPI recovered to the 7,800 level, regaining most of its sharp losses as negative factors weighing down the stock market were resolved. Despite ongoing macroeconomic uncertainties, it is expected that the KOSPI will continue its upward trend this week and attempt to settle above the 8,000 mark.

Yonhap News Agency

Last week, the KOSPI rose by 4.73%, while the KOSDAQ increased by 2.77%. The KOSPI dropped to the 7,200 level due to increased volatility from issues such as interest rates and the Samsung Electronics strike, which also triggered profit-taking. However, it succeeded in rebounding. Kang Jinhyuk, a researcher at Shinhan Securities, analyzed, "The KOSPI stabilized at the 7,800 level after absorbing both sell-side and buy-side sidecar triggers as volatility expanded due to domestic and international issues. Although there was strong profit-taking pressure stemming from concerns over interest rates, oil prices, and the Samsung Electronics strike, the market rebounded thanks to last-minute remarks by U.S. President Donald Trump regarding truce negotiations, strong earnings from Nvidia, and the resolution of labor-management negotiations at Samsung Electronics."

Although macroeconomic uncertainty is expected to persist, there are projections that the domestic stock market will maintain its strength. Kim Jongmin, a researcher at Samsung Securities, stated, "The KOSPI experienced significant corrections around the 8,000 mark. As the earnings season that drove the recent rally came to a close, there was a temporary loss of momentum, and the resurgence of macro and geopolitical risks increased downward pressure on the index early in the week. However, during this correction, the technical overheating from the recent surge was resolved, and the market managed to rebound impressively." He added, "Despite the ongoing challenging macro environment, we anticipate the domestic stock market will continue to rise despite negative factors, with a 'rising against all odds' trend for the time being."

Na Jeonghwan, a researcher at NH Investment & Securities, also commented, "Although recent volatility in stock prices has increased due to issues such as strikes, oil prices, and interest rates, what ultimately matters during volatile periods are earnings and valuations. In the short term, factors such as war and inflation concerns, as well as policy uncertainty following the appointment of Federal Reserve Chair Kevin Warsh, continue to contribute to volatility. However, as the second-quarter earnings season approaches, market attention is expected to shift from macro uncertainty to fundamentals, with earnings momentum coming back into focus. Coupled with attractive valuations, stock prices are likely to regain upward momentum." NH Investment & Securities projected the KOSPI's expected trading range for this week to be between 7,200 and 8,500.

This week, the market is also paying attention to the impact of single-stock leveraged exchange-traded funds (ETFs) that are scheduled to be listed. Researcher Na explained, "On May 27, a total of 16 single-stock leveraged and inverse ETFs, including those tracking Samsung Electronics, will be listed simultaneously for the first time in Korea. Given the favorable investment sentiment toward AI semiconductors following Nvidia's strong earnings, there is likely to be significant pent-up demand. However, as these may overlap with existing leveraged ETFs, their impact on index direction is expected to be limited, although the +/-2x daily rebalancing could increase end-of-day volatility." Researcher Kang also noted, "The launch of Samsung Electronics and SK hynix leveraged ETFs could serve as a factor increasing market volatility."

Key events scheduled for this week include the release of the U.S. May Conference Board Consumer Confidence Index on the 26th, the May Richmond Federal Reserve Bank Manufacturing Index on the 27th, and on the 28th, the Bank of Korea will hold its May Monetary Policy Board meeting, while the U.S. will announce April's Personal Consumption Expenditures (PCE) Price Index and new durable goods orders.

This content was produced with the assistance of AI translation services.