KOSPI Hits All-Time High, Will Rebound Continue?

The KOSPI index's ability to sustain its upward momentum after setting a new all-time high is drawing attention. Next week, the domestic stock market is poised to face a directional test, with factors like semiconductor performance expectations, foreign selling pressure, and U.S. interest rate-related variables converging. The KOSPI saw a slight decline from the previous day but had climbed to the 6490 level in early trading. The KOSDAQ index closed up 29.53 points (2.51%) at 1203.94. On the KOSDAQ market, foreign investors and institutions net bought 806.5 billion won and 179.6 billion won respectively, while individuals net sold 963.8 billion won.

The securities industry characterizes the recent market as a volatile phase driven by a combination of semiconductor performance expectations and geopolitical tensions in the Middle East. Analyses suggest that uncertainties such as regional tensions and rising oil prices have not been fully resolved.

Next week, the sustainability of the semiconductor performance momentum is identified as a key variable that will determine the market's direction. SK Hynix reported its highest-ever quarterly earnings in the first quarter, confirming expectations of an improving semiconductor industry outlook, and performance expectations have spread across related sectors. In the recent April export data, semiconductor exports increased by over 180% year-on-year, indicating a robust trend.

Market experts highlight that the KOSPI's current rise is based on corporate profit growth rather than liquidity. The index's fundamentals are being supported by continuous upward revisions in profit estimates, primarily driven by the semiconductor sector.

Concerns over rapid short-term gains and foreign selling are cited as factors that could increase short-term volatility. Foreign investor flows are a crucial variable in determining the index's future direction. Recently, foreign investors have continued their net selling in the spot market, and buying sentiment with a clear direction in the futures market has been limited. Analyses suggest that the index's upward momentum may slow down due to limited inflows from program trading.

The U.S. Federal Open Market Committee (FOMC) meeting is scheduled from the 29th to the 30th (local time). While interest rate freezes are widely anticipated, the key focus will be on the message the Federal Reserve delivers regarding inflationary pressures stemming from rising oil prices. In addition, the U.S. Q1 GDP and PCE inflation data, along with earnings reports from major big tech companies, are also identified as variables that could increase market volatility. The market holds the view that if rising oil prices fuel inflationary concerns, expectations for interest rate cuts could weaken.

There remains optimism that the KOSPI's upward trend could be maintained if the performance improvement trend, centered on semiconductors, continues. NH Investment & Securities suggests that the KOSPI is currently in a phase where earnings growth expectations have been priced in, recommending a strategy focused on sectors with confirmed earnings. Shinhan Investment Corp. advises that while a W-shaped rebound has succeeded after a sharp short-term decline, the possibility of increased volatility due to geopolitical risks and inflation variables needs to be considered. Analyses indicate that the recent correction has not led to a deterioration of corporate performance. The securities industry notes that upward revisions in profit estimates continue, particularly for semiconductors and industrial goods, suggesting the current market is largely characterized by short-term adjustments driven by supply and demand rather than a breakdown of the overall trend. For the time being, a market differentiating between individual stocks is more likely than a clear direction for the index.