Shinhan Investment "Q2, KOSPI Band Suggested at 2400~2730 Range"

Shinhan Investment Corp. expects the KOSPI to move within the 2400-2730 range in the second quarter.

On the 2nd, Donggil Noh, a researcher at Shinhan Investment Corp., explained in '2Q Domestic Stock Market Strategy: Opportunities Lie in the Details' that "the approach to the second quarter should be from a weak-to-strong perspective."

He stated, "The current decline in stock market valuation reflects a preemptive adjustment to downward earnings revisions," adding, "First-quarter earnings are being revised upward and are likely to meet expectations, but due to the disappearance of the exchange rate effect in the second quarter, we must endure downward earnings estimate revisions for the time being."

Researcher Noh said, "Major pension funds and other corporations centered on share buybacks will continue to support the downside of the KOSPI in the second quarter," and "It is expected that we will not face the supply-demand gap seen in the second half of last year."

He explained, "Foreign inflows are a variable that increases the possibility of index gains," but noted, "They have not yet significantly flowed into the domestic stock market in response to the manufacturing business conditions and tariff risks." He emphasized, "During the process of passing the peak of tariff risks in the second quarter, a KOSPI level lower than the appropriate valuation will be helpful."

However, worsening export prospects are expected to act as a burden. He said, "The export outlook is further weakening," and added, "We will seek a rebound after the peak of tariff risks and the easing of uncertainties in U.S. fiscal policy."

He also predicted that the first half of the second quarter will focus on themes, while the latter half will shift to passive investing. He stated, "The turning point is Samsung Electronics," and evaluated, "The relative performance of semiconductors has not been clear so far, but with the strengthening of export prospects in the latter half of the second quarter (due to U.S. and China policies), a reorganization centered on export stocks such as KOSPI 200 can be expected."

He explained, "In this scenario, the relative return weighted equally compared to KOSPI 200 will decline, and the utilization of index investment will increase rather than sector or stock selection," adding, "Until then, the strategy is the opposite: currently, attention is focused on strengthening export prospects, proactive interest in domestic consumption, and expectations for the lifting of the Hanhanryeong (Korean restrictions on Chinese entertainment)."

He continued, "We pay attention to (large-cap) healthcare and IT hardware sectors where exports are expected to increase differentially. From a thematic perspective, we focus on retail (distribution) and consumer goods due to the preemptive reflection of domestic stimulus measures," emphasizing, "With the policy shift in China, we can expect a valuation expansion pattern in media and content sectors."