[Market ING] Can the KOSPI Settle Above the 3,200 Mark?

Weekly KOSPI Expected Band: 3,000 to 3,250

The KOSPI, which had been taking a breather for a while, has resumed its upward march. Last week, the KOSPI rose for four consecutive trading days, breaking through the 3,200 mark during intraday trading for the first time in three years and ten months. This week, attention is focused on whether the KOSPI can settle above the 3,200 level.

Yonhap News Agency

Last week, the KOSPI rose by 3.98%, while the KOSDAQ increased by 3.18%. Kim Ji-won, a researcher at KB Securities, explained, "The rally continued as the market digested tariff events, such as President Donald Trump's tariff letter, and policy expectations were maintained following the proposal of a bill mandating treasury stock cancellation." She added, "However, as profit-taking occurred mainly in leading sectors, the KOSPI declined after five consecutive trading days of gains."

On July 11, the KOSPI broke through the 3,200 mark during intraday trading, setting a new yearly high. This was the first time since September 7, 2021 (3,200.07) that the KOSPI surpassed the 3,200 level during trading hours. Shin Seung-jin, a researcher at Samsung Securities, commented, "The KOSPI is enjoying a relentless rally after breaking through 3,200 last week. Whether it can surpass the 3,305 points recorded on July 6, 2021, for the first time in about four years is a key point." He further analyzed, "Despite downward revisions to overall earnings estimates for the KOSPI due to tariff uncertainties, the reason the KOSPI is outperforming other major global stock markets is largely due to a revaluation of the market itself, rather than improvements in earnings."

However, for the KOSPI to rise further, improvements in the earnings of large-cap export stocks will be necessary. Shin noted, "A notable aspect of this rally is that the KOSPI surpassed 3,000 points without significant strength in mega-cap stocks such as Samsung Electronics and Hyundai Motor. However, in our market, the earnings share of traditional export stocks like semiconductors and automobiles remains high. Therefore, for the KOSPI to climb further, increased earnings momentum among large-cap export stocks is essential."

With policy momentum remaining valid, it is expected that capital inflows into related sectors will continue. Na Jeong-hwan, a researcher at NH Investment & Securities, stated, "Policy momentum, such as the government's push for amendments to the Commercial Act including mandatory treasury stock cancellation, is a positive for stock prices, but above all, there is abundant idle capital in the market." He predicted, "Funds will continue to flow into sectors and stocks with policy and other price-rising momentum." NH Investment & Securities presented a projected KOSPI band of 3,000 to 3,250 for this week.

This week's major events include the release of China's June export and import data on July 14. On July 15, the US July New York Federal Reserve Manufacturing Index, the US June Consumer Price Index (CPI), China's second-quarter Gross Domestic Product (GDP), and China's June retail sales and industrial production figures are scheduled to be announced. On July 16, the US June Producer Price Index (PPI) and industrial production will be released. On July 17, the US June retail sales data will be published, followed by the University of Michigan's July Consumer Sentiment Index on July 18.

Lee Kyung-min, a researcher at Daishin Securities, commented, "The US June CPI, to be released on July 15, is expected to rise to 2.7% from 2.4% in May, with core CPI also projected to increase from 2.8% to 3.0% as tariffs are reflected in prices." He added, "Both the PPI and core PPI, to be released on July 16, are expected to rise by 0.2% month-on-month, compared to 0.1% in the previous month. The uncertainty regarding the impact of tariffs on prices is a major variable in the Federal Reserve's monetary policy decisions, so rising prices could delay expectations for a rate cut."