KOSPI Falls Below 2500... Is a Rebound Possible?

원본보기 아이콘

The KOSPI index fell to the 2500 level amid a series of tariff impositions by the United States. It retreated to the level seen earlier this month. Concerns over U.S.-origin tariffs continue, and volatility is expected to remain high for some time. However, the securities industry expects an eventual upward trend based on improved corporate earnings in the first quarter.

According to the Korea Exchange on the 31st, the KOSPI recorded 2557.98 on the 28th of this month. The stock price fell back to the level of the 5th. It dropped 3.25% compared to the highest point this month, 2643.94 on the 26th. The KOSDAQ index also recorded 693.76, falling below the 700 mark. It has returned to the level seen at the beginning of this year.

Domestic and international uncertainties are interpreted as factors influencing the index decline. First, U.S. President Donald Trump's tariff policy continues to act as an obstacle. On the 26th (local time), President Trump officially announced that a 25% tariff would be imposed on foreign cars imported into the U.S. starting April 3. He also announced the implementation of reciprocal tariffs on April 2.

Following this news, the KOSPI plunged 1.39% on the 27th and 1.89% on the 28th. South Korea's automobile export value last year was $70.8 billion (102.1856 trillion KRW). Nearly half of this, $34.2 billion (49.3471 trillion KRW), was exported to the U.S. Additionally, domestic political uncertainties continue, including the undecided date for the impeachment trial verdict of President Yoon Seok-yeol.

The resumption of short selling from the 31st is also a factor contributing to short-term volatility expansion. Lee Seong-hoon, a researcher at Kiwoom Securities, explained, "Looking at past cases of short selling resumption, short-term volatility expanded in individual sectors or stocks for about one month."

However, the securities industry expects that although volatility will increase in the short term, an upward trend will emerge in the medium term. First, a return of foreign investors due to short selling is anticipated. Researcher Lee Seong-hoon evaluated, "Short selling will be limited to short-term supply and demand noise. Since the proportion of foreign trading volume in the stock market, which sharply declined after the resumption of short selling, has risen again, gradual improvement in foreign investor supply and demand conditions is expected."

Along with this, corporate earnings improvement is also expected. According to FnGuide, the estimated operating profit for the first quarter of 100 domestic listed companies with earnings forecasts from three or more securities firms is 37.7276 trillion KRW, an increase of 21.96% compared to the same period last year. It also rose 1.57% compared to the forecast one month ago.

Yoo Myung-gan, a researcher at Mirae Asset Securities, said, "Domestic corporate operating profits this year are expected to increase from the first quarter through the third quarter," adding, "If first-quarter earnings exceed market expectations, a positive trend in the domestic stock market can continue."

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.