The domestic stock market has experienced significant fluctuations throughout the week, failing to recover the 8000-point mark. Following the preliminary earnings announcement from Samsung Electronics, concerns over semiconductor peak valuations and profit-taking have sharply dampened investor sentiment. Analysts view this adjustment as a correction of excessive expectations rather than a deterioration in fundamentals, but they anticipate continued volatility as the market assesses earnings and inflation indicators.
On July 10, the KOSPI closed at 7475.94, up 184.03 points (2.52%) from the previous trading day, while the KOSDAQ rose 43.43 points (5.47%) to finish at 837.43. Over the week from July 6 to 10, the KOSPI and KOSDAQ fell by 7.57% and 3.57%, respectively. The KOSPI has struggled to regain the 8000-point level for four consecutive trading days since July 7, dipping below 7000 at one point on July 9.
Last week, the domestic market faced significant selling pressure, particularly in the semiconductor sector, following Samsung Electronics' announcement of record second-quarter preliminary results. The company reported sales of 171 trillion won and an operating profit of 89.4 trillion won. However, the market's expectations had been set higher, with some anticipating operating profits around 100 trillion won, leading to a perception that the results fell short.
Additionally, concerns about peak memory market conditions, a slowdown in AI capital expenditures, and volatility from single-stock leveraged products contributed to the sell-off. Heightened military tensions between the U.S. and Iran, rising international oil prices, and foreign net selling further exacerbated the decline in investor sentiment.
However, some analysts suggest that this correction is more about adjusting expectations than a fundamental deterioration. Earnings forecasts for both the KOSPI and KOSDAQ are still being revised upward, and there are ongoing improvements in semiconductor performance. Notably, the scale of foreign net selling in semiconductors has decreased, and there is a positive influx of bargain buying in undervalued segments.
Looking ahead, key domestic and international economic indicators and corporate earnings are expected to shape market direction. On July 14, the U.S. Consumer Price Index (CPI) for June and the Federal Reserve's semiannual congressional report are scheduled for release, followed by the Producer Price Index (PPI) and ASML's earnings on July 15. The Bank of Korea's Monetary Policy Committee and TSMC's earnings announcement are set for July 16, which will likely influence market assessments of semiconductor conditions and monetary policy.
Analysts believe that the upcoming U.S. inflation data will significantly impact short-term market direction. Bloomberg's consensus predicts that the June CPI will show a year-over-year increase of 3.9%, with core CPI at 2.9%. If inflation is confirmed to be lower than market expectations, it could alleviate concerns about Federal Reserve tightening, positively affecting the stock market. Conversely, if results exceed expectations, fears of interest rate hikes may resurface, increasing market volatility.
Lee Jae-won, a researcher at Yuanta Securities, noted, "Despite this correction, the consensus for KOSPI net profit has been revised upward by 24.2 trillion won compared to the previous week, with upward revisions concentrated in IT, semiconductors, and IT hardware. Currently, there is no justification for a sharp decline in earnings per share (EPS), so both supply and demand still point towards IT and semiconductors."
Na Jeong-hwan, a researcher at NH Investment & Securities, added, "This correction is more reflective of anticipated earnings growth rates and concerns over a slowdown in AI capital expenditures rather than a fundamental deterioration. Stock prices are likely to fluctuate within a range before attempting to rise, and for a sustained rebound, we need to see continued AI demand and expanded CAPEX from big tech companies in upcoming earnings and guidance." He also cautioned that short-term price volatility unrelated to fundamentals may persist, suggesting a focus on sectors supported by solid earnings.
* This article has been translated by AI.
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