The KOSPI index has risen for five consecutive trading days, nearing the 7000 mark. Next week, the domestic stock market is expected to be influenced by semiconductor earnings and foreign investment trends. Analysts believe that the KOSPI's valuation normalization will continue, supported by easing inflation concerns in the U.S. and strong performances from AI infrastructure companies. However, profit-taking from the recent surge and geopolitical tensions in the Middle East are seen as potential variables.
According to the Korea Exchange, the KOSPI closed at 6977.94, up 164.60 points (2.42%) from the previous trading day. Over the past week, it has jumped 719.17 points from 6258.77, marking an increase of 11.49%.
The upward trend accelerated towards the end of the week. The KOSPI rose by 0.65% on August 10, 0.73% on August 11, and then surged by 3.68% and 3.56% on August 12 and 13, respectively. It continued to rise by 2.42% on August 14, marking five consecutive days of gains.
Foreign investors have contributed to the index's rise, with net purchases of 3.384 trillion won in the securities market on August 14, marking four consecutive days of net buying. In contrast, individual and institutional investors sold a net 1.9847 trillion won and 1.1269 trillion won, respectively, as they took profits.
The KOSDAQ also saw an 8.24% increase this week, rising from 798.81 on August 7 to 864.65 on August 14. However, after a 6.97% surge on August 10, the gains from August 11 to 14 were limited to 0.12% to 0.39%, indicating a slowdown in the upward momentum following a sharp rebound in oversold stocks.
Market analysts suggest that it may be time to refocus on large-cap stocks in the KOSPI following the short-term rebound from oversold conditions. Earnings estimates for the KOSPI continue to rise, and foreign capital is flowing into major semiconductor stocks like Samsung Electronics and SK Hynix.
Investor sentiment surrounding semiconductors is also recovering quickly. South Korea's semiconductor exports from August 1 to 10 reached $10 billion, a 155.4% increase compared to the same period last year, with DRAM export prices continuing to rise. Additionally, strong performances and investment expansions from U.S. AI infrastructure companies like CoreWeave and Supermicro have alleviated concerns about demand in the AI sector.
Given these improvements, the KOSPI's valuation burden is still considered low. The KOSPI's 12-month forward earnings per share (EPS) has increased to 1218.3 points, up from 1105.1 points at the end of June. However, the 12-month forward price-to-earnings ratio (PER) remains at around 5.6 times, indicating that the stock prices have not yet fully reflected the upward revisions in earnings forecasts.
Na Jeong-hwan, a researcher at NH Investment & Securities, stated, "As concerns about AI demand ease, the market is entering a recovery phase where it re-reflects earnings. Given that IT accounts for 77.3% of KOSPI net income, it is essential to maintain a focus on the IT sector."
Lee Kyung-min, a researcher at Daishin Securities, noted, "If concerns about the semiconductor industry subside and easing interest rate pressures are added, the KOSPI's valuation normalization will continue. In the short term, it is crucial to see if the index can stabilize between 6500 and 6800, as doing so could open up possibilities for further index level increases."
* This article has been translated by AI.
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