[Market ING] KOSPI Recovers 3,200 Mark, Box-Range Trading Expected for Now

Weekly KOSPI Expected to Move Within the 3,100 to 3,280 Range

The KOSPI, which had fallen sharply and lost the 3,200 mark on the first day of August, recovered above 3,200 last week. For the time being, it is expected that the stock market will move within the 3,100 to 3,300 range, fluctuating in response to individual issues such as economic indicators, trade negotiations, and corporate earnings.

Yonhap News

Last week, the KOSPI rose by 2.90%, while the KOSDAQ climbed by 4.72%. Kim Jiwon, a researcher at KB Securities, stated, "Despite a mix of issues such as concerns over the economy due to weak U.S. service sector and employment data, the implementation of reciprocal tariffs, and heightened expectations for interest rate cuts, the KOSPI rose by 2.9% and the KOSDAQ by 4.72%." She added, "In particular, the KOSDAQ recorded five consecutive days of gains, reflecting momentum in sectors such as semiconductor materials, parts, and equipment, as well as stocks related to Chinese consumption. For the KOSPI, there was a growing divergence in the share prices of major large-cap stocks depending on their earnings results."

There is an outlook that the market will remain in a wait-and-see mode for the time being, with a focus on individual stocks. Kim Jongmin, a researcher at Samsung Securities, said, "Since August, major global stock markets have shown no clear direction, repeatedly rising and falling. Investors are adopting a wait-and-see stance as concerns over the implementation of U.S. reciprocal tariffs coincide with expectations for a rate cut in September." He continued, "Additionally, August is seasonally a period of thin global liquidity due to vacation season and a policy vacuum, and this reduced liquidity is making the market more sensitive to both positive and negative news, resulting in sharp fluctuations in individual stocks. As the Korean market wraps up earnings season, a stock-picking market is expected to continue for now."

The daily trading volume, which exceeded 40 trillion won in June, has recently declined to just above 20 trillion won. Kim noted, "Given that stock market deposits are still maintaining a solid trend, it appears that investors are not leaving the market entirely but are instead watching for opportunities while remaining on the sidelines." She added, "At this point, it is important to take a long-term view of the market rather than responding in the short term."

With a box-range market expected for the time being, attention should be paid to undervalued stocks relative to earnings and those likely to benefit from policy. Lee Kyungmin, a researcher at Daishin Securities, said, "This week, the KOSPI is expected to fluctuate within the 3,100 to 3,300 range, depending on individual issues such as economic data, trade negotiations, and corporate earnings. In this phase of market consolidation, sector rotation is likely to continue. Investors should refrain from chasing recently rising stocks and instead focus on undervalued stocks that have not yet attracted attention." Na Junghwan, a researcher at NH Investment & Securities, commented, "Although external risk factors remain, policy-driven momentum such as visa-free entry for Chinese group tourists still supports domestic consumption and tourism-related sectors, so it is necessary to pay attention to these industries." NH Investment & Securities set this week's expected KOSPI band at 3,100 to 3,280.

This week's key events include Korea's export figures for August 1-10 on the 11th, the U.S. July Consumer Price Index (CPI) on the 12th, and the U.S. July Producer Price Index (PPI) on the 14th. On the 15th, U.S. July retail sales and industrial production, as well as China's July retail sales, industrial production, and fixed asset investment, will be released.

Lee explained, "Depending on the inflation data to be released on the 12th, there could be a change in the monetary policy consensus (the average forecast of securities firms)." He continued, "The headline CPI for July is expected to rise by 0.1% from the previous month, up 2.8% year-on-year, while the core CPI is expected to rise by 0.1% from the previous month, up 3.0% year-on-year. If inflation continues to rebound while expectations for three rate cuts within the year are already priced in, this could dampen expectations for further rate cuts." He added, "Given that recent rebounds in global stock markets and the KOSPI have been driven by expectations for monetary easing, any change in the monetary policy consensus could put a brake on further market gains, so investors should take into account potential market volatility in response to shifts in monetary policy expectations."