Will the KOSPI Maintain Its Strength Above 2,700 in June?

Stock Market Variables in June: Presidential Election and Tariff Uncertainty
Caution Needed for Short-Term Volatility After the Election
"Strong Early, Weak Later" Stock Trend Expected This Month

With the KOSPI recovering the 2,700 level for the first time in 10 months, attention is focused on whether the upward trend will continue this month. Given that the KOSPI rose by more than 5% in May alone, some analysts predict that the market may enter a phase of short-term overheating correction in June. Amid ongoing tariff uncertainties, the market is expected to closely monitor the results of the 21st presidential election scheduled for the 3rd, as these could have a significant impact on the stock market.

As of 9:30 a.m. on June 2, the KOSPI was up 8.42 points (0.31%) from the previous session, standing at 2,706.09. The KOSDAQ was also up 3.67 points (0.5%) at 738.02.

After dropping below the 2,700 mark on May 30, the KOSPI rebounded above 2,700 in just one day. It is expected that the KOSPI will continue to attempt to consolidate above the 2,700 level for the time being.

Securities firms forecast that the KOSPI could climb as high as the 2,800 level this month. Samsung Securities projected a KOSPI range of 2,500 to 2,800 for June, while Yuanta Securities and Daishin Securities suggested ranges of 2,550 to 2,800, respectively. Kim Yonggu, a researcher at Yuanta Securities, stated, "We expect the KOSPI to move within the 2,550 to 2,800 band this month, with a strong start and a weaker finish (neutral overall). While the launch of a new administration will act as a positive factor for a further market rally, the probability is high that President Donald Trump’s tariff pressure will intensify further in June and July."

The domestic stock market is expected to be particularly influenced by the outcome of the presidential election. The significant rise in the market last month was largely driven by expectations for the launch of a new administration, so short-term volatility following the election should be taken into account. Han Jiyeong, a researcher at Kiwoom Securities, said, "The KOSPI was able to break into the 2,700 range at the end of May not only due to the strong performance of leading sectors such as shipbuilding and defense, but also because of the strength in presidential election beneficiary stocks such as holding companies, banks, securities, and construction firms. In addition, both major party candidates?Democratic Party of Korea (pledging commercial law reform and MSCI developed market index inclusion) and People Power Party (pledging separate taxation on dividend income and capital market law reform)?included policies to resolve the Korea discount (undervaluation of the Korean stock market) in their platforms, which served as a catalyst for these beneficiary stocks." He added, "However, with the perception that the election-related momentum will be exhausted immediately after the election, and with the U.S. employment data and a domestic market holiday approaching later this week, investors should be aware that short-term profit-taking may occur, particularly in election beneficiary sectors."

Kim Yonggu added, "Following the launch of the new Korean administration, investors’ advance expectations for aggressive fiscal and monetary stimulus, as well as institutional and tax reforms aimed at resolving the Korea discount over the medium to long term, remain an internal positive factor driving further gains in June, following those in May."

Tariff uncertainty is also expected to continue to affect the stock market this month. Lee Kyungmin, a researcher at Daishin Securities, said, "As the results of trade negotiations with major countries become clearer following the U.S.-China trade talks, uncertainty regarding U.S. tariff policy is expected to peak in the short term. However, discord and conflict during the negotiation process will act as short-term noise."

Han Jiyeong commented, "Judicial intervention in tariff policy appears to be contributing to the variability of President Trump’s tariff actions. The imposition of mutual tariffs has prompted Trump to take an even more hardline stance on tariff policy. While Trump’s tariff moves will remain at the center of market volatility, it is still premature to view this as a major turning point in tariff uncertainty. At this stage, it seems appropriate to maintain the current scenario: respond after confirming that tariff risks have peaked and after monitoring for aftershocks in tariff data during June and July."