Will KOSPI Reach the '2800 Peak' Riding the May Value-Up?

KOSPI Rises Over 1% for Two Consecutive Days
Rebound Supported by Strong Corporate Earnings
Interest in Whether Value-Up Policy Will Provide Additional Momentum

The KOSPI, which had experienced adjustments earlier this month, has recently rebounded, drawing increased attention to the stock market movements in May. Based on strong first-quarter earnings from companies, the KOSPI is stabilizing, raising the possibility of reaching the 2800 level in May. In particular, with the corporate value-up program guidelines scheduled to be released in early May, the results are expected to impact the stock market.

According to the Korea Exchange on the 30th, the KOSPI closed at 2687.44, up 31.11 points (1.17%) from the previous session. It rose over 1% for two consecutive days, climbing into the 2680 range. The KOSPI hit a 52-week high of 2779.40 intraday on April 26, raising expectations for a recovery above 2800 in April. However, geopolitical risks from the Middle East and a retreat in interest rate cut expectations caused the 2600 level to break down, showing signs of volatility.

Recently, the easing of Middle East-related risks that triggered market adjustments and solid corporate earnings have supported the rebound. Lee Kyung-min, a researcher at Daishin Securities, explained, "During the sharp decline, uncertainties in monetary policy, geopolitical risks, and earnings anxiety simultaneously intensified, shocking the global financial market. However, while monetary policy uncertainty remains, geopolitical risks and earnings anxiety have eased recently."

Labor Gil, a researcher at Shinhan Investment Corp., said, "The KOSPI experienced a price adjustment of about 5% in April due to Middle East geopolitical tensions, volatility in international oil prices, and the rise of the won-dollar exchange rate. Among many negative factors, the only positive variable is the first-quarter earnings, which are expected to meet or exceed consensus (average securities firm forecasts)."

There are forecasts that the rebound will continue in May, pushing the KOSPI up to the 2800 level. Shinhan Investment Corp. projected the KOSPI's expected band in May to be between 2550 and 2800. Researcher Noh noted, "The first-quarter earnings season is expected to enter a phase of uncertainty resolution, and changes in second-quarter earnings also suggest the possibility of index recovery. The won-dollar exchange rate is acting favorably on KOSPI sales changes, with second-quarter net income estimates increasing by 6.6% from the bottom."

Daishin Securities expects the KOSPI to make a technical rebound in May, setting the first target at 2770 and the second target at 2820. The researcher said, "We anticipate a technical rebound in the KOSPI, with the first target at 2770, which is the previous high and the confirmed price-to-book ratio (PBR) of about 1. The second target is expected to be 2820, corresponding to a 12-month forward PBR of 0.954." He added, "Once the KOSPI attempts to break through and stabilize above 2750, it is necessary to strengthen response capabilities amid short-term volatility expansion."

Particularly, attention is focused on the corporate value-up program guidelines scheduled for early May. Ahead of the guideline release, low PBR stocks have surged significantly, supporting the KOSPI's rebound. Over the past week, the KOSPI financial sector index rose 9.82%, far outperforming the KOSPI's overall gain of 3.69% during the same period. Kang Dae-seok, a researcher at Yuanta Securities, analyzed, "Expectations for value-up remain valid. The sectors leading the rebound during the recent price adjustment and recovery process appear to be value-up related industries such as finance, holding companies, and automobiles."

The financial authorities will unveil the corporate value enhancement plan guidelines at the second seminar on corporate value-up support measures scheduled for the 2nd. The researcher said, "For further rises in low PBR stocks, the second seminar needs to provide specific content that exceeds market expectations. While directional investment is valid given that the value-up program is underway, it is time to consider adjustments between expectations and reality following short-term sharp rises due to preemptive optimism."