KOSPI Hits 8,000 Before Sliding to 7,400; Correction Likely for Now [Market ING]

Last week, the KOSPI swung between highs and lows. On May 15, the index hit the 8,000 mark during intraday trading but dropped more than 6%, closing the week below the 7,500 level. Due to an earnings vacuum and other factors, there are forecasts that the market may undergo a correction for the time being.

Yonhap News Agency

Last week, the KOSPI declined by 0.06% and the KOSDAQ dropped by 6.45%. Early in the week, the KOSPI surpassed the 7,800 mark and climbed up to the 7,900 level, boosting anticipation for a breakthrough above 8,000. Ultimately, on May 15, the index touched 8,000 during trading but then experienced a rollercoaster session, plunging over 6%. Lim Jeongeun, a researcher at KB Securities, commented, "On May 15, the KOSPI broke through the 8,000 level for the first time ever in the morning session, but as foreign investors' selling intensified, the index plummeted, triggering a sell-side sidecar. Last week, the KOSPI recorded a -0.06% change, while the KOSDAQ posted -6.45%." She further analyzed, "This appears to have been driven by profit-taking after a rapid surge in large-cap stocks. In addition, multiple factors such as U.S. President Donald Trump's hardline statements on Iran, rising U.S. and Japanese government bond yields, the won-dollar exchange rate climbing past 1,500 won again, and rising oil prices collectively dampened investor sentiment."

The sharp decline was particularly pronounced because the KOSPI had recently soared. Jo Ain, a researcher at Samsung Securities, explained, "The recent concentration of profit-taking due to the KOSPI's relative strength, concerns about easing of China-related regulations following the U.S.-China summit, and macroeconomic pressures all combined to justify profit realization, amplifying the market's decline. Although Asian markets overall were weak on May 15, the Korean market's drop was steeper because the KOSPI had risen the most in the short term."

There are now expectations that the market could undergo a short-term correction. Kim Byungyeon, a researcher at NH Investment & Securities, forecasted, "Although the plunge on May 15 was excessive, the Korean stock market is highly likely to move sideways or undergo a correction from mid-May to mid-June before resuming its upward trend."

Kang Jin-hyuk, a researcher at Shinhan Investment & Securities, noted, "Currently, the KOSPI's advance-decline ratio (ADR) is at 77.8%, reflecting an intensified concentration in semiconductors, and the 50-day moving average deviation is at its highest level since the 2000s (31.2% as of the 14th). While the semiconductor-driven rally is not a major concern, the high deviation stimulates profit-taking desires and means the market could react sensitively to negative news. As major companies such as big tech finish reporting earnings and attention shifts to macro factors, uncomfortable issues like geopolitics and interest rates have become more prominent. This suggests that the decline on May 15 may not be a one-off event."

Against this backdrop, the market's attention is expected to focus on Nvidia's earnings, scheduled for release on May 20. Lim added, "Uncertainties surrounding U.S.-Iran negotiations, interest rate pressures, and the labor strike at Samsung Electronics all present sources of short-term volatility. This week's Nvidia earnings announcement will play a crucial role in shaping investor sentiment toward AI-related stocks."

This week's major events include the release of China's April retail sales, industrial production, and fixed asset investment data on May 18. On May 21, Korea's export performance for May 1-20 will be announced, along with the U.S. S&P Global Manufacturing and Services Purchasing Managers' Indices (PMI). The minutes from the U.S. Federal Open Market Committee (FOMC) meeting in April will also be released.

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