[Market ING] KOSPI Falls Below 2,600 Again, Box-Range Trend Expected for Now

Weekly KOSPI Expected to Range Between 2,550 and 2,690

The KOSPI has entered a consolidation phase, falling back below the 2,600 mark. Attention is focused on whether this correction will continue in the coming week (May 26-30). Market participants are forecasting that a box-range trend will persist for the time being.

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Last week, the KOSPI declined by 1.32%, while the KOSDAQ dropped by 1.25%. Lee Kyungmin, a researcher at Daishin Securities, explained, "The aftermath of the U.S. credit rating downgrade and concerns over the fiscal deficit have weighed on the bond market, fueling volatility across global stock markets." He added, "The recent sharp rebound in bond yields has been driven more by sentiment and supply-demand factors than by fundamental variables. In addition, the optimism that was priced into financial markets during the recovery process following the tariff shock, as well as overheated investor sentiment, have also contributed to increased volatility."

The market is expected to remain in a box-range for the time being. Shin Seungjin, a researcher at Samsung Securities, said, "The KOSPI is undergoing a period of adjustment around the 2,600 level. After rebounding about 15% from the low in April, we see this as a phase to resolve technical overheating." He continued, "It is true that the recent rise in bond yields is putting pressure on the market. This is because investors are demanding higher returns (yields) due to persistently high fiscal deficits and the tax cut policies of the Donald Trump administration." He further noted, "Since tariff uncertainties also persist, the market is likely to continue moving within a box-range for the time being."

Profit-taking has emerged, and the strength of foreign investor buying has also weakened. Last week, foreign investors made a net sale of 318.1 billion won in the stock market. After buying more than 1 trillion won the previous week, they have now turned to net sellers. Na Jeonghwan, a researcher at NH Investment & Securities, said, "As the KOSPI surpassed the 2,600 mark and approached a forward price-to-earnings ratio (PER) of 9.0 times, profit-taking emerged in the stock market and the strength of foreign net buying also weakened. This week, aside from Nvidia's earnings, there are no major global events, so the domestic presidential election could come into focus. Among the domestic presidential pledges, expectations are centered on policies to stimulate domestic demand and the stock market. While there are both pros and cons to the proposed amendments to the Commercial Act, considering the positive aspects, interest in low price-to-book ratio (PBR) stocks may increase." NH Investment & Securities presented a projected KOSPI band of 2,550 to 2,690 for this week.

This week, the market is expected to focus on Nvidia's earnings. Nvidia is scheduled to announce its first-quarter results on May 28 (local time). Researcher Na said, "While first-quarter results for AI big tech companies this year have generally exceeded expectations, Nvidia is expected to reflect losses on its H20 chip inventory, which was scheduled for export to China, due to export restrictions on graphics processing units (GPUs) to China." He continued, "At the same time, Nvidia is exporting AI chips to Middle Eastern countries such as Saudi Arabia and the United Arab Emirates (UAE), which is a positive factor that could partially offset the impact on this year's earnings." Lee added, "As the leader in the AI semiconductor market, Nvidia will set the direction, and this could bring a favorable wind to the domestic semiconductor industry."

Key events this week include the release of U.S. April durable goods orders and the May Conference Board Consumer Confidence Index on May 27, and the May Richmond Federal Reserve Bank Manufacturing Index on May 28. On May 29, the Bank of Korea will hold its May Monetary Policy Board meeting, and the minutes of the May U.S. Federal Open Market Committee (FOMC) meeting will be released. On May 30, the U.S. April Personal Consumption Expenditures (PCE) price index will be announced.

Lee commented, "On May 30, the U.S. Federal Reserve's preferred April PCE price index will be released, which could influence bond yield movements. The year-on-year increase is expected to be 2.2%, with core PCE rising 2.5%, both slowing by 0.1 percentage point compared to the previous month. If price stability is confirmed amid the Trump administration's shift to a more accommodative tariff policy, expectations for a rate cut are likely to be revived."