[Market ING] KOSPI Recovers from Tariff Shock, Focus Shifts to Earnings

Weekly KOSPI Projected Band: 2,380 to 2,600

The KOSPI is regaining stability after the tariff shock. Attention is focused on whether the KOSPI, which recovered to pre-"Black Friday" levels on April 7, can reclaim the 2,500 mark this week (April 21-25).

Yonhap News

Last week, the KOSPI rose by 2.08% and the KOSDAQ by 3.19%. Lee Kyungmin, a researcher at Daishin Securities, analyzed, "U.S. President Donald Trump's reciprocal tariff policy has entered the negotiation phase after a 90-day grace period. Tariffs on electronics and auto parts have been eased, while regulations, not tariffs, have been introduced for semiconductors and pharmaceuticals. This confirms the maximum level of pressure from Trump." He added, "As expectations for negotiations, starting with Japan, are being reflected, the stock market has shifted from a phase of fear to one of relief."

With the market regaining stability, it now seems necessary to prepare for a potential rise in the index. Na Jeonghwan, a researcher at NH Investment & Securities, said, "Despite the U.S. government's semiconductor export restrictions and hawkish comments from Jerome Powell, Chair of the U.S. Federal Reserve, the KOSPI rose on the back of net buying by institutional investors." He continued, "Although the U.S.-China tariff war is worsening more than expected, all foreseeable risk factors have already been revealed, so investors are now viewing stocks from a buying perspective. Given that a 'Bad is Good' scenario could unfold in the future, it is necessary to build a portfolio that prepares for upside risk rather than a defensive one." NH Investment & Securities suggested a projected KOSPI band of 2,380 to 2,600 for this week.

With tariff concerns somewhat alleviated, market attention is expected to shift to first-quarter earnings this year. This week, major U.S. big tech companies such as Tesla, Amazon, and Intel are scheduled to announce their results. Lee Kyungmin commented, "During the sharp market decline, regulations on China, export restrictions, and the tariff shock have already been partially priced in." He added, "Depending on these companies' earnings and guidance, the share prices of companies included in domestic and global value chains, as well as overall market sentiment, are expected to be affected."

It appears that guidance, rather than the earnings themselves, will be the key focus. Kang Jinhyuk, a researcher at Shinhan Investment Corp., said, "We need to focus on the impact of tariff-related uncertainty on companies' earnings and capital expenditure (CAPEX) guidance." He pointed out, "With ongoing tensions between the U.S. and China, a big tech guidance shock could serve as another downside factor." Na Jeonghwan also noted, "Given the strong pre-purchase demand ahead of U.S. tariff imposition, first-quarter earnings could turn out to be solid. However, when it comes to earnings guidance, which has a greater impact on share prices, companies may present conservative forecasts, taking tariff effects into account. While share prices have already reflected much of the tariff risk, it is important to remember that they are still within the range of tariff impact."

The earnings of domestic companies are also expected to influence share prices. Lee Kyungmin said, "We expect price fluctuations depending on the earnings results of leading companies in each sector and industry." He added, "Sectors that have gained price merit due to recent corrections may attempt a rebound, but for stocks with high price and valuation burdens, caution is needed as they could become targets for profit-taking."

Key events scheduled for this week include the announcement of Korea's export figures for April 1-20 and the U.S. Conference Board Leading Economic Index for March on April 21. On April 23, the U.S. S&P Global Purchasing Managers' Index (PMI) for April and the release of the Fed Beige Book are scheduled. On April 24, Korea's first-quarter gross domestic product (GDP) and U.S. new orders for durable goods in March will be announced. On April 25, the University of Michigan Consumer Sentiment Index for April will be released in the U.S.

Major earnings announcements from both U.S. and domestic companies will also continue. Tesla is set to release its results on April 22, IBM on April 23, and Amazon and Intel on April 24. Among Korean companies, HD Hyundai Electric will announce on April 22; Samsung Biologics and LG Innotek on April 23; SK Hynix, Hyundai Motor, KB Financial, Samsung SDI, LG Display, and Hanwha Solutions on April 24; and Kia and Shinhan Financial Group on April 25, all reporting their first-quarter earnings.