KOSPI in Bottom Phase: "6,500–9,300 Range" Gradual Recovery Expected in August [Good Morning Market]

Forward PER Remains at Historic Lows
Earnings Season and Other Factors Fuel Optimism

The domestic stock market, which saw a record-breaking plunge in July, is expected to gradually rebound in August as concerns over artificial intelligence (AI) earnings and jitters about China-related semiconductors ease. Some forecasts suggest that the index could rise from the 6,500 range to above 9,300.

On July 31 (local time), at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 52,485.03, up 0.53% from the previous session. The S&P 500 climbed 0.7% to 7,489.72, while the Nasdaq Composite rose 1% to close at 25,373.85.

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Although semiconductor stocks saw some profit-taking—Micron fell 5.9%—Amazon jumped 15.3% on an earnings surprise, helping to ease concerns across the AI industry. Sentiment remains upbeat as the second-quarter earnings season continues.

KOSPI surged 17% on July 31, so some profit-taking is expected in the early part of the week. However, the industry still views the market as being in an "undervalued zone." Han Ji-young, a researcher at Kiwoom Securities, commented, "Despite the sharp surge on the 31st, July's monthly return was -22.1%, which ranks third-worst since 1990, indicating a deep oversold territory. The fact that the forward price-to-earnings ratio (PER) remains at a historical low of 5.5 times also supports this view."

Han further stated, "This week, we expect markets to recover some of July's losses, driven by the resumption of ceasefire negotiations between the U.S. and Iran, key U.S. economic indicators such as July employment data, earnings from U.S. semiconductor companies like SanDisk and AMD, and results from major Korean companies such as Hyundai Department Store and NAVER." Han projected the KOSPI's weekly range to be between 6,000 and 7,000 points.

As for the earnings of U.S. semiconductor stocks, Han analyzed that they could serve as a catalyst for continued rebounds in both domestic and foreign semiconductor shares. He said, "Key points to watch for AMD are whether both AI graphics processing unit (GPU) and server GPU demand are growing, if revenue growth is translating into improved gross margin, and whether third-quarter data center guidance indicates further growth. SanDisk's results are expected to have a direct impact on forecasts that the memory cycle has peaked."

There is also an outlook that the market may recover to above the 9,000 level in the future. Lee Kyung-min, a researcher at Daishin Securities, noted, "We are focusing on whether KOSPI can settle in the 6,500 to 6,800 range. This marks a 38.2% retracement of the decline from the June 22 high and is a significant inflection point from a valuation perspective. If the index settles in this zone, it could first rebound to the 8,200 level, where the forward PER hits 7 times, and later to the 9,300 range, where the forward PER reaches 8 times."

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