[Market ING]KOSPI Above 5,800, Focus Turns to Nvidia's Earnings

This Week's KOSPI Projected Trading Band: 5,500?5,800

The KOSPI has climbed above the 5,800 level. It continued its rally for two consecutive trading days after the Lunar New Year holiday and, for the first time in history, broke through the 5,800 mark. As attention focuses on how long this steep rise in the stock market will last, the market's key point of interest this week is expected to be Nvidia's earnings.

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Last week, the KOSPI rose 5.48% and the KOSDAQ gained 4.33%. With the market open for only two trading days last week due to the Lunar New Year holiday, the KOSPI climbed 3.09% on the 19th and a further 2.31% on the 20th. After breaking through the 5,600 level on the 19th, it went on to surpass both 5,700 and 5,800 on the 20th. Lee Kyungmin, a researcher at Daishin Securities, analyzed, "The KOSPI's sharp rally continued as its undervaluation appeal, combined with expectations for share buyback cancellations ahead of the National Assembly's passage of the third amendment to the Commercial Act, attracted inflows," adding, "With semiconductor gains continuing and rotational buying unfolding, the 12?month forward price?earnings ratio (PER) has recovered from 8.72 times to around 10 times, reaching the first stage of valuation normalization."

Given that the current market strength is based on earnings and liquidity, there appears to be little need to be excessively concerned about external volatility. Park Kiryang, a researcher at Samsung Securities, said, "The driving forces behind this unprecedented bull market are earnings and liquidity," and explained, "Forecasts for controlling shareholders' net profit on the KOSPI in 2026, led by the big two in semiconductors, are continuing to rise. In addition, a record?high 5.2 billion dollars flowed into Korea?focused funds last week, and, helped by the government's capital market revitalization policies and investors' money?move phenomenon, stock deposit balances and trading values are being maintained at high levels. This is expected to serve as a solid support that will protect the downside of the index even if market volatility occurs." He added, "Rather than reacting emotionally to external volatility such as escalating tensions between the United States and Iran and the Blue Owl redemption suspension issue, we recommend using this phase to craft investment strategies."

With concerns about artificial intelligence (AI) persisting, the market's attention is expected to focus on Nvidia's earnings announcement scheduled for this week. Nvidia will release its results for the fourth quarter of fiscal year 2026 (November to November) on the 25th. Lee commented, "The outlook for the AI industry will be determined by Nvidia's earnings announcement," and continued, "The current fourth?quarter consensus (the average of securities firms' forecasts) is for revenue of 65.82 billion dollars and earnings per share (EPS) of 1.52 dollars, and the market is expecting a positive surprise that exceeds these numbers. Remarks by CEO Jensen Huang are also in the spotlight. He now faces a situation where he must both dispel concerns about AI cannibalizing existing industries and about overinvestment, while at the same time highlighting the growth potential of AI investment."

Na Junghwan, a researcher at NH Investment & Securities, said, "As AI?related stocks in the U.S. stock market remain weak due to concerns over AI profitability, Nvidia's earnings announcement is important as an event that could open the door to a shift in this trend," adding, "Nvidia's EPS consensus is 1.52 dollars, which represents an expected 70.8% increase year?on?year, so expectations are high. The key will be whether profitability indicators such as guidance and gross profit margin (GPM) can be maintained, rather than the absolute earnings figures themselves. If some of the uncertainty is reduced, the market's focus is likely to shift from the debate over monetization to the visibility of growth." He went on to say, "If concerns over software monetization are partially resolved through the unveiling of new chips at Nvidia's annual GTC developer conference in March and through Salesforce's earnings release scheduled for the 26th, this period will serve as a gauge for whether AI?related concerns are easing."

As the KOSPI's upward trend continues, some analysts say investors should maintain their weightings in leading stocks. Lee noted, "After the National Assembly passes the amendment to the Commercial Act, we expect shareholder?friendly policies to be strengthened and share buyback cancellations to begin in earnest at the March shareholders' meetings, and we also expect upward revisions to earnings forecasts to resume during the first?quarter pre?earnings season. Based on earnings and policy, this suggests that the upward trend will continue," adding, "Even taking into account short?term fluctuations following the rapid rally, it is necessary to maintain weightings in leading stocks and to keep accumulation strategies that utilize short?term volatility."

Na said, "As uncertainty over AI monetization in the U.S. stock market is concentrated in software and sector rotation is under way, a valid domestic sector strategy is to maintain core exposure to semiconductors and AI infrastructure (power equipment, nuclear power, ESS), while, from an alpha?generation perspective, simultaneously increasing weightings in neglected sectors (energy, healthcare, media and entertainment) where upward revisions to net profit forecasts over the past two weeks have been confirmed." NH Investment & Securities presented this week's expected KOSPI trading band as between 5,500 and 5,800.

Key events this week include the release of Korea's export data for February 1-20 on the 23rd, followed on the 24th by U.S. data on new manufacturing orders for December and the February manufacturing index from the Federal Reserve Bank of Dallas. On the 25th, the February manufacturing index from the Federal Reserve Bank of Richmond and the February consumer confidence index from the Conference Board will be released in the United States. On the 26th, the Bank of Korea's Monetary Policy Board meeting for February is scheduled, and on the 27th, the U.S. producer price index (PPI) for January will be announced.