[Good Morning Market] Strong US Semiconductor Index... KOSPI Expected to Attempt Breakthrough of 7,900

On May 12, the KOSPI is expected to attempt to break through the 7,900 level, driven by the strength of the semiconductor sector.

In the previous session, the Dow Jones Industrial Average in the New York stock market closed at 49,704.47, up 95.31 points (0.19%) from the previous trading day. The S&P 500 index ended at 7,412.84, up 13.91 points (0.19%), while the tech-heavy Nasdaq Composite finished at 26,274.13, up 27.05 points (0.10%).

This month, major global stock markets have continued their upward trend, led by semiconductor stocks, on the back of strengthened expectations for a memory supercycle. However, the yield on the U.S. 10-year Treasury bond has once again surpassed the 4.4% per annum level, increasing the burden of higher interest rates.

In the market, it is believed that uncertainty over energy inflation stemming from the U.S.-Iran war, as well as strong U.S. employment data in April, have both weakened expectations for a Federal Reserve rate cut. In fact, in the federal funds futures market, there is a strong consensus that rates will remain unchanged through the December 2027 Federal Open Market Committee (FOMC) meeting.

According to the market consensus (average forecast), the U.S. headline Consumer Price Index (CPI) growth rate for April is expected to be 3.7% year-on-year, higher than March’s 3.3%. This indicates that the market has already proactively reflected upward inflationary pressures.

Han Ji-young, a researcher at Kiwoom Securities, explained, “If the actual CPI result exceeds the market’s elevated expectations, it is appropriate to be prepared for additional increases in market interest rates, which could place short-term selling pressure on the stock market, especially given concerns over peaks and momentum.”

On this day, the domestic stock market is expected to show a mix of downward factors—such as uncertainty over U.S.-Iran negotiations and the wait-and-see stance ahead of the CPI release—and upward factors, including strong U.S. semiconductor stocks and the possibility of individual domestic investors chasing semiconductor stocks. Accordingly, it is widely expected that the KOSPI will likely attempt to break through the 7,900 level.

Regarding concerns over the recent surge in margin loans, which have come into focus amid the sharp rally, some analysts say that excessive caution is not necessary. As of May 8, the outstanding margin balance on the KOSPI reached a record high of 24.4 trillion won, while the KOSDAQ also approached an all-time high at around 11 trillion won.

One researcher emphasized, “It is important to note that the increase in margin balances falls short of the rise in KOSPI stock prices.” Indeed, from April to May 8, the KOSPI rose by 48%, while margin balances increased by only about 10% during the same period. In the semiconductor sector, stock prices rose by 78%, but margin balances grew by just 1%.

He explained, “Even in this historic bull market, the surge in margin balances has been limited due to supply constraints such as securities companies’ credit limits and margin rate management, as well as the market’s focus on large-cap stocks, which has led to a higher proportion of direct cash buying and exchange-traded fund (ETF) trading among individual investors.”

He added, “The risk of a vicious cycle of forced selling following corrections, as seen in the past, is not as great as feared. Unlike before, this market rally has not been accompanied by large-scale leverage. Considering the accelerating profit momentum and continued upward revisions of the KOSPI ceiling by domestic and foreign securities firms, there is still further upside potential for the index.”

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