[Good Morning Market] Anticipation of January Effect... KOSPI Expected to Open Higher

On January 2, the first trading day of the new year, the KOSPI is expected to open higher amid anticipation of the so-called January Effect.

On December 31, 2025 (local time), the last trading day of the previous year, the Dow Jones Industrial Average in the New York stock market closed at 48,063.29, down 303.77 points (-0.63%) from the previous session. The S&P 500 Index ended at 6,845.50, down 50.74 points (-0.74%), while the tech-heavy Nasdaq Index finished at 23,241.99, down 177.09 points (-0.76%).

Last year, global stock markets generally experienced a bull run, driven by increased liquidity from major governments and the expansion of the artificial intelligence (AI) industry. Among them, the Korean stock market recorded the highest returns compared to other major countries.

From the beginning of last year to the present (year-to-date), the KOSPI rose by 75.6% and the KOSDAQ by 36.5%, significantly outperforming other major global stock markets. During the same period, the Hong Kong Hang Seng Index rose 27.8%, the Japan Nikkei 225 increased 26.2%, the Taiwan TAIEX climbed 25.7%, the Shanghai Composite Index gained 18.4%, and the Euro Stoxx 50 advanced 18.3%. In the United States, the Nasdaq rose 20.4% and the S&P 500 increased 16.4%, showing a comparatively moderate upward trend.

The strong performance of the domestic stock market is analyzed as the result of positive catalysts circulating throughout the year, mainly among large-cap stocks. At the beginning of the year, expectations for a global industry upcycle and the so-called "Trump Trade" led to rallies in shipbuilding, defense, and nuclear power sectors. In the middle of the year, expectations for stock market revitalization policies following the launch of the new government fueled a rally in financial and holding company stocks. Toward the end of the year, the spread of AI momentum and a sharp rise in legacy memory semiconductor prices drove the semiconductor sector to lead the market's gains.

The market is placing considerable weight on the possibility that the domestic stock market will continue its upward trend in 2026. Although the explosive growth seen last year may not be repeated, three drivers-expanded liquidity, government policy momentum, and corporate earnings improvement-are still considered valid. In terms of valuation, the KOSPI's 12-month forward price-to-earnings ratio (PER) is 10.3 times, which is only at the 10.1 times average of the past 10 years, suggesting that it is premature to say the market has entered an overvalued territory.

However, the concentration of profits in the semiconductor sector is cited as a risk factor. According to FnGuide consensus, Samsung Electronics' operating profit for the 2026 fiscal year is projected at 87.1 trillion won, and SK hynix at 77.1 trillion won. The combined operating profit of these two companies accounts for about 38% of the estimated total KOSPI operating profit of 430 trillion won in 2026. Nevertheless, most analyses still suggest that the earnings cycle in the semiconductor industry remains intact.

In fact, according to the export trends for December 2025, released on January 1, 2026, semiconductor exports increased by 43.2% compared to the same month of the previous year, marking ten consecutive months of growth and setting a new monthly record. This is interpreted as an indicator that the upward trend in earnings, centered on semiconductors, is continuing. The market believes that if the easing of valuation pressure due to improved semiconductor earnings continues, the KOSPI could see additional upgrades throughout the year.

Going forward, the market will need to monitor major events such as the US Institute for Supply Management (ISM) Manufacturing Purchasing Managers' Index (PMI), which is closely linked to Korea's exports, and Samsung Electronics' preliminary earnings announcement to determine whether the upward momentum for semiconductors can be sustained.

On December 30, 2025, despite a rebound in large-cap semiconductor stocks, the domestic stock market closed lower ahead of the final trading day of the year due to profit-taking and a sharp decline in secondary battery stocks caused by negative news on individual stocks. The KOSPI fell by 0.15% and the KOSDAQ by 0.76%.

Lee Sunghoon, a researcher at Kiwoom Securities, predicted, "After the sell-off related to the year-end major shareholder transfer tax, we are seeing a reinflow of funds. The strong export performance in December, robust earnings momentum of leading stocks, and expectations for the so-called 'January Effect' are likely to enable a short-term upward start."

He added, "At the beginning of the year, major events such as CES, the JP Morgan Healthcare Conference, and the announcement of new government economic policy directions tend to concentrate, strengthening the growth stock narrative. As a result, the KOSDAQ may show relative strength compared to the KOSPI, and in the short term, a theme-driven market is expected to develop, centered on robotics and bio-related stocks."