In July, the domestic stock market saw a significant decline, with seven out of ten listed companies on the KOSPI and KOSDAQ experiencing drops. The KOSDAQ was particularly hard hit, with approximately three-quarters of its stocks falling. Investors are closely monitoring the market's direction for August. Analysts agree that the inflow of foreign capital, particularly in the semiconductor and financial sectors, will be a key factor in determining the market's trajectory for the month.
According to the Korea Exchange, as of July 31, 1,859 out of 2,645 listed stocks on the KOSPI and KOSDAQ had lower prices compared to the end of June, representing 70.3% of all listed stocks. Specifically, among the 917 KOSPI-listed stocks, 566 (61.7%) declined, while 1,293 out of 1,728 KOSDAQ-listed stocks (74.8%) fell. Notably, about three out of four KOSDAQ stocks recorded negative returns.
The KOSPI dropped 22.2% in July, while the KOSDAQ fell by 21.4%. This marks the largest monthly decline since the global financial crisis began in October 2008.
Despite the overall downturn, individual stock performances varied widely. Kolon TissueGene saw the largest drop, plummeting 86% following the announcement of clinical trial results for its osteoarthritis gene therapy. Other significant decliners included The Technology (-76%), Kolon Life Science (-67%), Contentree Central (-67%), StradVision (-65%), and Justek (-64%). Conversely, G&E Healthcare recorded a remarkable 222% increase, leading the gains, followed by ICH (87%), Becton (86%), Enex (85%), and Joyworks & Co. (75%).
Market analysts suggest that the recent stock market adjustment is more influenced by a decline in investor sentiment than by deteriorating corporate earnings. However, there remains potential for a rebound, particularly in the semiconductor and financial sectors, which experienced significant declines.
Lee Kyung-min, a researcher at Daishin Securities, stated, "Recent upward adjustments in forward earnings per share (EPS) and profit forecasts for this year and next indicate that corporate earnings fundamentals remain solid. The KOSPI is currently in an excessively undervalued state." Han Ji-young, a researcher at Kiwoom Securities, added, "The KOSPI remains in an oversold zone, and the earnings trends of major companies like Samsung Electronics and SK Hynix will determine the market's direction."
Brokerages advise focusing on sector-specific strategies and foreign capital trends in their August investment strategy reports. Promising sectors include semiconductors, finance, defense, and food and beverage.
Lee Jae-man, a researcher at Hana Securities, noted, "Historically, after significant declines, foreign investors tend to maintain a net buying trend for about six months. Given the widening gap in the MSCI emerging market index inclusion ratio between Samsung Electronics and TSMC, the potential for foreign capital inflow is increasing."
Kim Min-kyu, a researcher at KB Securities, projected the KOSPI's range for August to be between 5,500 and 8,000, recommending a strategy to increase exposure in the banking, cosmetics, and food sectors while approaching the steel and battery sectors with caution.
Shinhan Investment Corp. maintained a favorable outlook on the semiconductor and artificial intelligence (AI) infrastructure sectors, highlighting NVIDIA's earnings report and domestic export indicators as key market variables, while also noting the growth potential of the AI industry.
* This article has been translated by AI.
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