[Market ING] KOSPI Eyes 8,500 Amid Concentration in Leading Stocks

Weekly KOSPI Projected Trading Range: 7,500–8,600

Last week, the KOSPI settled above the 8,000 mark. The concentration of investment in leading stocks such as Samsung Electronics and SK hynix has intensified, and for the time being, the movement of these two stocks is expected to determine the overall trend of the KOSPI.

Yonhap News Agency

Last week, the KOSPI rose by 8.01%, while the KOSDAQ fell by 7.43%. On May 29, the KOSPI closed up 3.55% at 8,476.15, setting yet another all-time high. Sangjun Lee, a researcher at NH Investment & Securities, said, "The KOSPI settled above 8,000, continuing its rally centered on semiconductors. With the risk of a Samsung Electronics strike being resolved and UBS raising its target price for Micron from $535 to $1,625—more than a threefold increase—Micron’s stock price surged, which also had an impact on the rise of domestic semiconductor stocks. The listing of single-stock leveraged exchange-traded funds (ETFs) for Samsung Electronics and SK hynix led to concentrated inflows, further fueling the semiconductor surge."

The concentration in semiconductors is intensifying. The combined market capitalization of these two stocks now exceeds half of the entire KOSPI. Kyungmin Lee, a researcher at Daishin Securities, explained, "During the more than 1,000-point rebound in the KOSPI from its low on May 20, Samsung Electronics (22%) and SK hynix (43%) together contributed 65% of the increase. As a result, these two stocks now account for more than half of the KOSPI’s total market capitalization, and their fluctuations are effectively determining the direction of the KOSPI."

Jongmin Paek, a researcher at Samsung Securities, stated, "The global stock market is currently obsessed with the keyword 'artificial intelligence (AI),' and all inflows are focused there, with the Korean stock market being even more extreme in this regard. In terms of weekly returns, the KOSPI rose 8%, while the KOSDAQ fell 7.4%, demonstrating a clear index decoupling." He added, "To be objective, the KOSPI’s rise cannot be seen as a complete improvement in terms of quality, as only a handful of core leading stocks are driving the index upward, creating a highly polarized market."

In June, attention should be paid to the spread of rotational trading. Jungeun Lim, a researcher at KB Securities, commented, "While the trend of semiconductor-led stocks continues, we are entering a phase where the multiple burden from May's sharp rally is being alleviated. As we expect conditions to improve with reduced net selling by foreign investors and a slowdown in mechanical selling by pension funds, it is important to watch for the possibility of rotational trading spreading to previously neglected sectors."

There is also a view that the proportion of semiconductor-led stocks should be maintained. Jaewon Lee, a researcher at Yuanta Securities, said, "From a sector strategy perspective, maintaining a heavy weighting in semiconductor-led stocks remains a priority. However, given the excessive concentration of inflows into semiconductors and IT hardware during May’s rally, it is also important to watch in June for the possibility of rotational trading spreading to sectors that saw excessive declines, such as secondary batteries, shipbuilding, defense, and securities. The key is not to exit leading stocks, but to see the spread while maintaining their weighting."

Sangjun Lee further noted, "Due to the rapid short-term rally and deepening concentration in semiconductors, the Korean stock market is exposed to higher volatility compared to other countries. Nevertheless, the earnings momentum centered on semiconductors remains strong, and valuations are still attractive. Semiconductor exports from May 1 to 20 jumped 202.1% year-on-year, reaffirming strong memory demand. Short-term volatility should be viewed as an opportunity." NH Investment & Securities suggested a KOSPI trading band of 7,500 to 8,600 for this week.

This week’s major events include the release of Korea’s May export data and the U.S. Institute for Supply Management (ISM) manufacturing index for May on June 1. On June 2, Korea’s May Consumer Price Index (CPI) will be announced, and on June 3, the U.S. ISM services index for May is scheduled for release. On June 5, the U.S. May employment report will be published.

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