[Market ING] KOSPI Recovering from Shock of Middle East Conflict

Weekly KOSPI Expected Range: 5,500–6,100 Points

The KOSPI has shown relatively resilient performance despite volatility caused by uncertainties in oil prices. Although the war in the Middle East is still ongoing, the stock market is gradually recovering from the shock, and investors' focus is increasingly shifting toward fundamentals such as first-quarter earnings.

Yonhap News Agency

Last week, the KOSPI rose by 5.36%, while the KOSDAQ advanced by 0.74%. Jeong-Eun Lim, a researcher at KB Securities, commented, "KOSPI recorded a weekly return in the 5% range, partially recovering from the previous sharp decline," and analyzed, "The rebound in Samsung Electronics and SK hynix, driven by individual factors such as expectations for NVIDIA GTC and Micron's earnings, played a key role." She added, "This suggests that, despite geopolitical uncertainties, stocks of companies with solid fundamentals are fully capable of rebounding. Although stock market volatility caused by the war is expected to continue, a strategy focused on earnings-driven stocks will remain effective."

Jongmin Paek, a researcher at Samsung Securities, noted, "Despite complicated external factors, the Korean stock market is displaying a resilient uptrend," and analyzed, "While the global financial markets continue to react in real-time to geopolitical risks stemming from the Middle East, the overall impact of these issues on the market appears to be gradually diminishing."

Key factors supporting the relative strength of the Korean stock market include earnings, market liquidity, and policy. Paek explained, "The rally in KOSPI earnings estimates, led by the two major semiconductor companies (Samsung Electronics and SK hynix), is ongoing. In particular, Micron's recent earnings surprise has further heightened expectations for Samsung Electronics' provisional first-quarter results scheduled for early April." He continued, "Although foreign investors' selling pressure has increased in terms of market liquidity, ample funds from stronger individual and institutional investors are absorbing this, thereby supporting the Korean stock market." He added, "As the government's 'capital market structural improvement plan' becomes more concrete, a favorable investment environment is being created. In addition, the official start of the regular shareholders' meeting season and proactive shareholder return measures announced by companies are acting as catalysts that are heating up investor sentiment."

However, some analysts predict that, in the absence of major economic indicators being released this week, market fluctuations caused by oil prices will be inevitable. Kyungmin Lee, a researcher at Daishin Securities, said, "Although the impact of geopolitical issues shaking the market in March appears to be peaking, the lack of significant economic data releases this week means that market volatility driven by oil price movements is unavoidable." He pointed out, "The key variable is not the continuation of the conflict, but rather the restoration of the energy supply chain in the Strait of Hormuz."

Junghwan Na, a researcher at NH Investment & Securities, stated, "Despite ongoing policies to address the Korea Discount, the Korean stock market remains in an undervalued range based on the price-to-earnings ratio (PER)." He explained, "As KOSPI earnings forecasts are being revised upward, the current 12-month forward PER stands at 9.5 times, still below the 10-year average of 10.5 times. Given the solid semiconductor exports in January and February, as well as Micron's recent strong results, there is a possibility of further upward revisions in earnings forecasts following the release of preliminary first-quarter results by major semiconductor companies in April. Therefore, maintaining a higher allocation to AI infrastructure-related sectors (semiconductors, electric equipment, and nuclear power) alongside earnings improvements is advisable." NH Investment & Securities presented a projected KOSPI band of 5,500 to 6,100 for this week.

This week's key events include the announcement of Korea's export figures for March 1-20 on the 23rd, and the release of the U.S. S&P Global Manufacturing and Services Purchasing Managers' Index (PMI) for March and the U.S. Richmond Federal Reserve Manufacturing Index for March on the 24th.

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