Korea Investment & Securities: "June KOSPI Forecast Band 8,500–9,000"

Korea Investment & Securities projected that the KOSPI would continue its upward trend in June, presenting a forecast band of 8,500 to 9,000 points. By sector, the firm recommended increasing the proportion of IT sectors, particularly semiconductors.

According to the monthly investment strategy report released by Korea Investment & Securities on June 4, the KOSPI is expected to maintain its upward momentum in June, although increased volatility is anticipated due to concerns over prolonged high interest rates, which may prompt a period of consolidation. The forecast band remains at 8,500 to 9,000 points. Previously, on June 2, the KOSPI closed at 8,801.49, reaching an all-time high, and even surpassed 8,900 points at one stage during intraday trading.

On the 2nd, the Seoul Jung-gu Hana Bank dealing room status board displayed the KOSPI and other indexes. On that day, the KOSPI closed at 8,801.49, up 13.11 points (0.15%) from the previous trading day, while the KOSDAQ closed down 24.00 points (2.29%) at 1,026.03. Photo by Yonhap News.

Kim Daejun, the researcher at Korea Investment & Securities who authored the report, stated, "The world is still exposed to uncertainty in the Middle East," adding, "Although there are expectations that the United States and Iran will agree to a ceasefire, the normalization of actual crude oil supply remains distant. During this process, a high interest rate environment, which is unfavorable to the stock market, may persist."

Kim also commented, "It is somewhat fortunate that retail funds are flowing into the securities market," and explained, "As foreigners are engaging in large-scale net selling ahead of a strong won and mega IPOs, individual investors have been defending the market on a daily basis." However, he emphasized that this phenomenon is limited to certain stocks, primarily in IT. He analyzed, "Since the IT sector accounts for a significant portion of the Korean market, the KOSPI has been able to hold its ground. If IT stocks rise further on expectations for artificial intelligence (AI) growth, there could be additional upside potential."

Corporate earnings are also focused on IT investments. Kim noted, "Among the recent upward revisions to the KOSPI earnings outlook, the IT sector—especially semiconductors—has been the biggest contributor," and suggested that investors increase their weighting in IT sectors, with a particular emphasis on semiconductors.

The policy stance of the U.S. Federal Reserve is also expected to serve as a burden for the stock market. The Taylor rule rate, which can influence the direction of monetary policy, currently stands at 6.55%, significantly higher than the upper bound of the federal funds rate (3.75%). The new Fed regime led by Chairman Kevin Warsh was also cited as a variable. Kim explained, "There is a high possibility that the inflation metric will shift from core personal consumption expenditures (PCE) to another variable. Since the trajectory of each inflation indicator is different, policy uncertainty may increase depending on which indicator Chairman Warsh chooses."

In addition, Kim pointed out, "With high oil prices entrenching the high interest rate environment, the stock market's supply and demand dynamics are also being distorted. Although net selling by foreign investors has rapidly increased, the proportion of stocks held by foreigners in the KOSPI has actually risen. This is essentially a negative risk." He added, "For now, retail funds are concentrated in IT, absorbing foreign sell-offs. However, in this structure, the momentum for further market gains is inevitably diminished."

Nonetheless, Kim concluded, "In a prolonged high interest rate environment, the strategy is to select and focus. Although increased price volatility has resulted from foreign capital outflows, the IT-led market rally is not yet over. The direction of the KOSPI will continue to be determined by the performance of the IT sector."

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