[Good Morning Stock Market] Entering Q2 Earnings Season... "Expecting Differentiated Market by Stocks and Sectors"

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[Asia Economy Reporter Park Jihwan] The KOSPI has been fluctuating slightly below after surpassing the record closing level of the '3300 mark.' Since reaching a new high of 3302.84 (closing) and 3316.08 (intraday) on the 25th of last month, it has maintained a range in the high 3200s. Experts analyze that, given the current burden of the index being at a peak, it is time to focus on sectors and stocks expected to deliver strong earnings ahead of the Q2 earnings season this month.

◆ Seosangyoung, Researcher at Mirae Asset Securities = Despite challenging market conditions such as a sharp increase in COVID-19 cases, the Korean stock market rose, buoyed by expectations of economic improvements in the U.S. and China. Particularly, the KOSDAQ showed strong performance, approaching the April high?the highest since September 2000?due to foreign and institutional buying in IT parts, materials, and equipment sectors. This is presumed to be driven by growing optimism ahead of the earnings season.

Considering the strong performance of economic normalization-related stocks in the U.S. market overnight, the KOSDAQ is expected to undergo a process of digesting sell-offs. The weakness of tech stocks in the U.S. due to profit-taking is a concern, as similar profit-taking pressures are rising in some Korean sectors such as internet and certain pharmaceutical and biotech stocks.

In light of this, the Korean market is expected to show strength centered on semiconductors and large export stocks. Profit-taking in some stocks that have recently seen significant gains is inevitable, and rapid differentiation by stock and sector is anticipated.

◆ Han Jiyoung, Researcher at Kiwoom Securities = The Korean stock market is expected to show limited price movement. Concerns about the Delta variant surge, along with major U.S. economic indicators such as the ISM Manufacturing Index (June 1) and Nonfarm Payrolls (June 2), will maintain a cautious sentiment. Additionally, influenced by weakness in U.S. tech stocks, there is a possibility of profit-taking in growth stocks that have recently experienced short-term gains.

However, Micron Technology’s (+2.4%) strong earnings and guidance after the U.S. market close in the previous session are expected to improve the subdued investment sentiment in the domestic semiconductor sector. The export data for June, to be released before the market opens, is also expected to show positive trends, so the market is likely to fluctuate within a limited range.

◆ Choi Yujun, Researcher at Shinhan Financial Investment = The improvement in U.S. consumer sentiment indicators and the decline in interest rates are positively impacting the stock market, especially growth stocks. The KOSPI turned upward after a single day of decline, and the KOSDAQ has risen for three consecutive days, approaching its yearly high. The existing leading sectors, such as internet and software, have seen gains and the positive momentum has spread across the industry.

In particular, since last month, the KOSDAQ’s relative outperformance has continued. After breaking back above 1000 points, it is attempting to reach new yearly highs. Ahead of the June employment report, it remains relatively free from macroeconomic pressures, and pension fund inflows continue. If interest rate volatility remains low, there is a strong possibility that this relative advantage will extend until the Q2 earnings season fully unfolds.

This content was produced with the assistance of AI translation services.