[Market ING] KOSPI Turns Down After Six Weeks... Focus on Tariff Negotiations

KOSPI Weekly Forecast Band: 2,950 to 3,180
Market Awaits Tariff Negotiations and Samsung Electronics' Earnings
Expanded Liquidity Expected to Support Stock Prices

The KOSPI's weekly return turned downward for the first time in six weeks. After a rapid climb, the KOSPI is undergoing a process of absorbing selling pressure and is struggling to firmly settle above the 3,100 level.

Yonhap News

Last week, the KOSPI fell by 0.05%, while the KOSDAQ dropped by 0.74%. Kim Ji-won, a researcher at KB Securities, explained, "This week, the KOSPI fluctuated due to tariff negotiations and the US tax cut plan, ultimately falling by 0.05%, with the KOSDAQ down by 0.74%. Although President Donald Trump's tax cut plan passed the House of Representatives, selling pressure emerged in sectors such as automobiles, secondary batteries, and semiconductors due to factors including price and subsidy reductions. With the passage of the Commercial Act amendment, market momentum faded, and uncertainty over tariff negotiations led the market as a whole to take a breather." She added, "The weakening of foreign investor inflows, rapid sector rotation, and absorption of supply have slowed the upward momentum. The KOSPI is still in the process of settling above the 3,100 level, and there is a growing divergence in performance among individual stocks, indicating a process of distinguishing between strong and weak stocks."

The market is expected to focus on reciprocal tariffs. Lee Kyung-min, a researcher at Daishin Securities, stated, "As the deadline for reciprocal tariff negotiations approaches, the market is repeatedly fluctuating between expectations for an agreement and caution, undergoing a process of cooling off and absorbing supply. The direction of the stock market this week will be determined by whether reciprocal tariffs are enforced, postponed, or negotiated."

Researcher Kim also noted, "This week, key factors include US tariff negotiations, Samsung Electronics' earnings, and the Monetary Policy Board meeting. The outcome of the tariff negotiations, which will continue through the 8th, will be a major variable for the market's direction this week."

However, there are forecasts that expanded liquidity will support stock prices. Na Jeong-hwan, a researcher at NH Investment & Securities, commented, "Although tariff negotiations with the US have not been completely finalized and there are concerns about second-quarter earnings, there is still a desire to take profits as the KOSPI surpasses the 3,100 level. Nevertheless, there is ample capital waiting in the stock market, buoyed by expectations for new government policies. In addition, new government initiatives such as the second supplementary budget are liquidity-supplying policies, and ultimately, expanded liquidity will support stock prices." He added, "In sectors backed by policy support, there has been an inflow of net buying after price corrections as policies became visible. Therefore, it is advisable to maintain or increase exposure to sectors with policy momentum." NH Investment & Securities suggested a projected KOSPI range of 2,950 to 3,180 for this week.

Key events scheduled for this week include Samsung Electronics' preliminary second-quarter earnings on the 8th, and the release of China's June Consumer Price Index (CPI) and Producer Price Index (PPI) on the 9th. On the 10th, the Bank of Korea's July Monetary Policy Board meeting will be held, and the minutes of the US Federal Open Market Committee (FOMC) meeting for June will be released.

Researcher Lee stated, "Samsung Electronics' earnings will be announced on the 8th, and the direction of the KOSPI will be determined by whether the company's business conditions improve amid the recent recovery in semiconductor exports and the price cycle. The current consensus (average securities firm forecast) is for second-quarter sales of 76.6 trillion won and operating profit of 6.5 trillion won. As expectations for improvement over previous results are not high, confirming the results may help resolve uncertainties."