On June 26, the Korea Exchange reported that the KOSPI closed at 8411.21, down 519.09 points (5.81%) from the previous trading day. Over the week from June 22 to June 27, the KOSPI fell 7.08%, while the KOSDAQ dropped 11.92%. The KOSPI recorded its largest single-day drop of 9.99% on June 22, followed by rebounds of 3.26% and 5.42% on June 24 and 25, respectively. However, it fell again by 5.81% on June 26, resulting in an unprecedented situation where circuit breakers were triggered twice in one week, creating a rollercoaster market.
Last week, the stock market plummeted due to a combination of concerns over additional interest rate hikes by the U.S. Federal Reserve, profit-taking, end-of-quarter rebalancing, and controversies surrounding unrealized gains taxation. Following this, Micron reported earnings and guidance that significantly exceeded market expectations, reviving optimism about the memory semiconductor sector and improving investor sentiment towards semiconductor stocks. However, traditional leading sectors such as automotive and shipbuilding faced substantial corrections, and the KOSDAQ continued to struggle due to capital outflows and declining performance expectations.
Market participants are also paying attention to structural changes in the memory semiconductor industry. Micron has announced an expansion of long-term supply contracts and minimum price guarantees, confirming a shift in the memory industry toward long-term contract-based operations rather than short-term price cycles. This has raised expectations for improved earnings visibility for Samsung Electronics and SK Hynix. Analysts suggest that upward revisions in companies' earnings per share (EPS) forecasts could lead to an overall improvement in KOSPI earnings projections.
Next week, several significant events are scheduled. On June 29, a 24-hour pilot trading session for the Korean foreign exchange market will commence. On July 1, June export and import figures, along with the U.S. ISM manufacturing index for June, will be released. Additionally, from July 1, a three-day event celebrating the 30th anniversary of KOSDAQ and 'KOSDAQ Connect 2026' will take place. On July 2, the U.S. will announce new non-farm payrolls and unemployment rates for June, which are expected to influence the Fed's monetary policy outlook. Furthermore, the implementation of a revised delisting system starting in July has raised interest in potential improvements in the domestic stock market's structure.
Lee Jae-won, a researcher at Yuanta Securities, stated, "This correction is more about resolving technical overheating than damaging fundamentals. The trends in semiconductor exports, memory prices, and EPS estimates remain upward. The key variable this week is the U.S. employment report, and an approach focused on large-cap KOSPI stocks where earnings and supply-demand are confirmed in semiconductors, IT hardware, and banking is advisable."
Na Jeong-hwan, a researcher at NH Investment & Securities, noted, "The sharp drop on June 23 was an event-driven fluctuation caused by multiple adverse factors coming together, but it does not change the overall market direction. Ultimately, stock prices are determined by earnings, so it is essential to maintain a strategy of increasing exposure to sectors with high earnings visibility."
However, some analysts have advised a more cautious approach given the volatility. Jo Byeong-hyeon of Daol Investment & Securities remarked, "In July, rather than expecting a trend of new highs, it is advisable to adopt a trading perspective that utilizes volatility. The U.S. employment data to be released on July 2, along with key economic indicators such as the consumer price index (CPI) and producer price index (PPI) scheduled for July 14 and 15, could significantly influence the Fed's policy expectations, so it is important to remain vigilant. He added that while focusing on semiconductors with solid earnings expectations, attention should also be given to the retail and securities sectors.
* This article has been translated by AI.
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