[Market ING] KOSPI Retreats from Nearing 9,000 to Falling to 8,100

Weekly KOSPI Expected Range: 7,800–8,900

Last week, the KOSPI experienced a roller-coaster ride. On June 2, it climbed to an intraday high of 8,933.62, seemingly on the verge of breaking through the 9,000 mark, but then plummeted sharply for two consecutive days, falling to the 8,100 level. For the time being, the market is expected to undergo a period of cooling in leading stocks and digestion of supply overhang.

Yonhap News Agency

Last week, the KOSPI fell by 3.72% and the KOSDAQ by 6.73%. Compared to the high recorded on June 2, the KOSPI dropped by 8.65%. Kim Jongmin, a researcher at Samsung Securities, analyzed, "Last week, the KOSPI showed extreme volatility, swinging more than 10% from the high of 8,933 points to the low of 8,038 points. The index briefly fell to the 8,000 level, sparking a temporary sense of panic in the market." He added, "This was the result of market participants engaging in mechanical risk management as macroeconomic, geopolitical, and event-related uncertainties overlapped in a market already fatigued from a short-term surge."

Lim Jeongeun, a researcher at KB Securities, said, "On June 5, weakness in the semiconductor sector and burden from the exchange rate led both indices to close lower. The U.S. stock market also saw declines led by the semiconductor sector after Broadcom's AI revenue outlook fell short of expectations, and the sharp drop in U.S. semiconductor stocks negatively affected investment sentiment in Korea's semiconductor sector, resulting in both Samsung Electronics and SK hynix weakening together." She added, "Additionally, the domestic market faced downward pressure as the won-dollar exchange rate approached 1,540 won and as profit-taking from short-term overheating emerged. This triggered a sell-side sidecar for the KOSPI during trading hours and caused the KOSDAQ to fall below the 1,000-point mark during the session."

As leading semiconductor stocks that had driven the stock market rally turned weak, they pulled the KOSPI down. SK hynix declined for three consecutive days recently, falling by 12.40% during this period, while Samsung Electronics dropped by 8.74% over the two days of June 4 and 5. For the time being, a reversal phase is expected as a reaction to the previous concentration in specific stocks. Lee Kyungmin, a researcher at Daishin Securities, analyzed, "During the KOSPI's sharp rise, the advance-decline ratio (ADR) fell below 50%, which is the opposite pattern from the bottoming phase during past downtrends," and added, "This indicates an excessive concentration phenomenon and suggests that a reversal is inevitable."

The scheduled listing of SpaceX this week is cited as a potential volatility factor. Lee Sangjun, a researcher at NH Investment & Securities, said, "With SpaceX's NASDAQ listing scheduled for June 12, there could be concerns about outflows of funds from existing leading stocks from a supply-demand perspective. SpaceX has set its IPO price at $135 per share, valuing the company at $1.77 trillion (compared to Tesla's market capitalization of $1.6 trillion). If SpaceX is included in the NASDAQ 100 Index 15 trading days after its IPO, there could be short-term supply-demand concerns for large-cap stocks such as the Magnificent 7 (M7)."

Researcher Lee Kyungmin added, "If the SpaceX listing becomes imminent, it could act as a black hole for global liquidity, increasing capital outflows from the KOSPI, which has outperformed global stock markets. In fact, $570 million has flowed out of Korean Exchange Traded Funds (ETFs) for five consecutive weeks." He continued, "Although the influence of foreign trading in the Korean stock market has weakened, if capital outflows intensify for clear reasons, short-term volatility in the KOSPI could be triggered. The extent of the decline will depend on whether inflows into financial investments continue."

While an expansion in volatility is inevitable for now, there is an outlook that the uptrend will return as the second-quarter earnings season approaches. Researcher Lee Kyungmin said, "Until mid-June, the market will be in a phase of digesting variables such as the U.S. and China Consumer Price Index (CPI), Producer Price Index (PPI), European Central Bank (ECB), Bank of Japan (BOJ), and U.S. Federal Open Market Committee (FOMC) meetings, increasing the possibility of short-term volatility expansion as issues like inflation and monetary policy are digested." He added, "Afterwards, as the second-quarter pre-earnings season arrives, the market is expected to resume its upward trend."

Researcher Lee Sangjun also said, "In the short term, the Korean stock market may remain volatile due to concerns over rising prices and exchange rates, supply-demand issues from the SpaceX listing affecting the M7, and a lack of earnings momentum. However, as we move into the second-quarter earnings season after mid-June, earnings momentum is expected to strengthen again." He continued, "Recently, news that Alphabet is pursuing an $80 billion rights offering to secure funding for AI infrastructure investment not only highlights the funding issues facing big-tech companies but also demonstrates their strong determination to win the AI race. Korea is also expected to continue benefiting from AI infrastructure investments." NH Investment & Securities forecast the KOSPI to trade in a range of 7,800 to 8,900 this week.

Key events this week include the release of China's export data for May on June 9; the U.S. May CPI and China's May CPI on June 10; Korea's export performance for June 1-10, the U.S. May PPI, and the ECB monetary policy meeting for June on June 11; and the release of the U.S. University of Michigan Consumer Sentiment Index for June on June 12.

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