[Good Morning Market] SK hynix ADR Success... TSMC Earnings Key to KOSPI Rebound

On July 13, the KOSPI is expected to show a period of consolidation as investors await the earnings reports of major global semiconductor companies.

Last Friday in New York, the Dow Jones Industrial Average closed at 52,637.01, up 149.60 points (0.29%) from the previous session. The S&P 500 index rose 31.75 points (0.42%) to 7,575.39, while the tech-heavy Nasdaq Composite finished at 26,281.61, up 74.72 points (0.29%).

Last week, global stock markets experienced a major correction centering on leading semiconductor stocks such as Samsung Electronics, SK hynix, and Micron. However, in the latter part of the week, sentiment shifted as the consensus grew that the decline had been excessive. Concerns that the memory industry had peaked earlier than expected were seen as exaggerated, leading to a gradual stabilization of panic selling.

This week, the KOSPI is projected to recover last week's losses, influenced by factors such as the U.S. June Consumer Price Index (CPI), U.S. Federal Reserve Chair Kevin Warsh's testimony before Congress, U.S. financial sector earnings, the earnings of ASML and TSMC, and changes in domestic semiconductor supply and demand.

The most closely watched variable is the U.S. June CPI. Market expectations are for overall consumer prices to rise 3.8% year-on-year, and for core inflation to increase by 2.8%, both slowing from the previous month. This is interpreted as a sign that May's inflation may have represented the peak of the current cycle.

A particularly positive factor is the sharp stabilization of international oil prices in June, which had previously fueled inflation in the first half of the year. The average price of West Texas Intermediate (WTI) crude oil dropped significantly compared to May, which could further ease inflationary pressures.

However, more important than macroeconomic factors in the current market is the full-fledged start of the second-quarter earnings season. Major U.S. financial institutions such as Goldman Sachs and JPMorgan will be among the first to announce earnings, but analysts believe that market attention is likely to focus primarily on semiconductor companies.

Indeed, both ASML and TSMC are scheduled to report earnings this week. Since ASML provided strong second-quarter guidance in its previous earnings call, the market is expected to pay more attention to future orders and investment plans rather than the quarterly results themselves.

TSMC is also a key variable. Amid recent stock price corrections, the market is interested in whether TSMC will further raise its full-year guidance and confirm that demand for its advanced CoWoS packaging continues to outstrip supply. The ongoing CoWoS supply shortage is having a direct impact on investment sentiment in the domestic semiconductor sector, as it affects demand for AI accelerators, high-bandwidth memory (HBM), and even DRAM supply.

The recent success of SK hynix's American Depositary Receipts (ADR) is also seen as a positive signal for the domestic stock market, as high U.S. investor interest indicates that optimism about the domestic semiconductor sector remains largely intact.

However, several variables still require further confirmation: whether the ADR premium can be sustained, whether conversion trading between U.S. and Korean shares will proceed smoothly, and whether major U.S. big tech companies will continue to expand their AI investments.

Yoo Jiyoon, an analyst at Kiwoom Securities, said, "For this week, it is appropriate to focus on the recovery path of domestic investor sentiment in semiconductor stocks, driven by the success of SK hynix ADR."

He added, "With the KOSPI’s valuation making it attractive for entry, and if macroeconomic relief is confirmed through the U.S. CPI, the positive momentum could spread not only to semiconductors but also to other major sectors such as multilayer ceramic capacitors (MLCC), power equipment, consumer goods, and securities, leading to a broader recovery in returns."

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