"Buying Interest Environment" and "Prolonged War Risk Spreads": KOSPI Faces Both Hopes and Concerns [Market ING]

Weekly KOSPI Forecast Range: 5,300–6,000

The KOSPI has retreated back to the 5,400 level, shaken by the ongoing Middle East war and the Google TurboQuant issue. It is expected that risk aversion sentiment will continue this week due to volatility caused by the war.

Yonhap News Agency

Last week, the KOSPI fell by 5.92%, and the KOSDAQ dropped by 1.72%. Lee Kyungmin, a researcher at Daishin Securities, explained, "With geopolitical risks in the Middle East still present, anxiety over Google's TurboQuant issue, which is expected to dampen semiconductor demand, has intensified, causing semiconductors—which had been leading the rebound—to reverse and decline."

Jongmin Kim, a researcher at Samsung Securities, also analyzed, "The international situation remains unpredictable, with negotiations between the United States and Iran facing difficulties due to the gap between the two sides. This is fueling concerns about a prolonged war and renewed inflation. On top of this, the Google TurboQuant issue has sparked worries that global memory semiconductor demand may have peaked, leading to significant volatility in the Korean stock market as well."

However, there are analyses suggesting that the current concerns are excessive. Researcher Lee said, "With negotiations between the U.S. and Iran ongoing and the commercialization timing of TurboQuant still uncertain, fears of a slowdown in semiconductor demand seem overblown." Researcher Kim also pointed out, "The current phase is a period where excessive psychological fear is reflected, rather than a deterioration of fundamentals. Given the potential for continued negotiations rather than an escalation of the war, the environment is ripe for buying interest driven by excessive declines."

As foreign investors continue to sell, attention is focused on how Korea's inclusion in the World Government Bond Index (WGBI), scheduled for April 1, will affect foreign capital flows. Foreign investors have sold nearly 30 trillion won in the KOSPI market this month. Lim Jeongeun, a researcher at KB Securities, stated, "This week, there is the WGBI inclusion event for Korea on April 1. If instability in the bond market persists alongside expectations, there are concerns that the impact of foreign capital inflow may fall short of expectations."

Researcher Lee added, "Starting in April, Korea Treasury Bonds will be gradually included in the WGBI, with index weighting scheduled to increase until November. As the proportion of government bonds rises, passive funds are expected to flow in mechanically. In addition, the March trade data to be released on April 1 should confirm solid fundamentals centered on semiconductors. If these two factors contribute to a decline in government bond yields and the won-dollar exchange rate, the fundamentals of the domestic stock market could be highlighted."

With major economic indicators such as employment data due for release this week, risk aversion sentiment is likely to persist. Researcher Lim commented, "Caution over rising inflation and unexpected variables stemming from Trump over the weekend will continue to drive risk-averse sentiment."

Amid the ongoing Middle East war, it is expected that investments will continue to focus on the defense industry, power equipment, and nuclear power sectors. Na Jeonghwan, a researcher at NH Investment & Securities, said, "Even if the war with Iran ends immediately, it will be difficult for oil and commodity prices to return quickly to previous levels. Regardless of whether the war with Iran ends, we believe there will be increased investment in air defense systems in major countries and heightened demand for energy independence. Therefore, investment is likely to continue to concentrate on defense, power equipment, and nuclear power sectors." NH Investment & Securities forecasted the expected KOSPI range for this week to be between 5,300 and 6,000.

Key events scheduled for this week include the release of the U.S. February Job Openings and Labor Turnover Survey (JOLTs) and China's March National Bureau of Statistics Purchasing Managers' Index (PMI) on March 31; Korea's March export data, the U.S. March ADP private employment report, the U.S. February retail sales, and the U.S. March Institute for Supply Management (ISM) manufacturing index on April 1; and the U.S. March employment report on April 3.

Researcher Lee said, "The March nonfarm payroll report, to be released on the night of April 3, will provide insight into the real economic impact of the war. Consensus is that March new jobs will come in at 51,000, an improvement from the previous month's -92,000, suggesting that the impact of the war on the employment market in March remains limited. The ADP private employment report to be released on April 1 will serve as a leading indicator for the employment report."

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