[Market ING] KOSPI Rallies to Fresh Record Highs Again, Focus on Big Tech Earnings and FOMC

The KOSPI broke through its previous all-time high, surpassing the 6,500 mark for the first time ever during trading hours. The KOSDAQ also climbed above the 1,200 level for the first time in 25 years. As the impact of the war gradually weakens, the market is expected to focus on the upcoming earnings announcements from big tech companies and the U.S. Federal Open Market Committee (FOMC) this week.

Yonhap News Agency

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Last week, the KOSPI rose by 4.58%, while the KOSDAQ gained 2.89%. Jaewon Lee, a researcher at Yuanta Securities, stated, "Both the KOSPI and KOSDAQ continued their record-breaking streak. Solid corporate earnings and profit momentum are outweighing macro issues such as geopolitical tensions. Although some profit-taking occurred after breaking through the 6,500 mark, given U.S. President Donald Trump's announcement of a conditional indefinite ceasefire extension, the earnings-driven market rally fueled by upward revisions to profit estimates is likely to remain intact, surpassing geopolitical volatility."

Foreign investors have been the main driving force behind the record highs this month. Lee noted, "There is a clear trend of foreign capital returning, with the proportion of foreign ownership in large-cap stocks like Samsung Electronics rebounding from historical lows at the end of March. The correlation coefficient with the index in April stands at 0.85 for foreign investors and 0.9 for financial investment (ETF), showing that both groups are leading the push to new record highs."

There are expectations that the market's upward trend will continue. Jongmin Paek, a researcher at Samsung Securities, commented, "Global stock markets continue to set new records, and the KOSPI has entered uncharted territory by hitting fresh highs. While the Iran situation is seeing a tug-of-war between hopes and disappointments during negotiations, its market impact is gradually diminishing. Therefore, the current upward trend is unlikely to fade easily and is expected to move up another level." He added, "The ongoing rally, with new highs being reached as supply is absorbed, creates a strong 'momentum of ascent' in itself. Now is the time to fully enjoy the energy of the rally rather than exiting the market on premature peak predictions."

Attention should be paid to proven leading stocks and companies with improving earnings. Jeonghwan Na, a researcher at NH Investment & Securities, explained, "The current 12-month forward price-to-earnings ratio (PER) of the KOSPI stands at 8.5 times, below the historical average (10 times), while the trailing price-to-book ratio (PBR) is near a record high at 1.99 times. The reason the PER is below average is that the market has already priced in a sharp jump in future earnings, and the record-high PBR reflects both improvements in return on equity (ROE) driven by semiconductor and artificial intelligence (AI) infrastructure and expectations for value-up policies. This makes the current phase cheap relative to earnings but expensive relative to capital, so it is difficult to label it as simply overvalued or undervalued. Therefore, a viable strategy is to hold core positions in proven leading sectors (semiconductors, power equipment, nuclear power, defense), while selectively adding stocks within sectors that are expected to see significant ROE improvement this year compared to last year (trading companies and capital goods, energy, media and entertainment, nonferrous and lumber, IT hardware, essential consumer goods) where earnings improvement is confirmed." NH Investment & Securities suggested a KOSPI forecast range of 5,800 to 6,700 for this week.

This week’s key events include the release of the U.S. Dallas Fed Manufacturing Index for April on April 27. On the 28th, the U.S. Conference Board Consumer Confidence Index for April and the Richmond Fed Manufacturing Index for April will be announced, while the Bank of Japan (BOJ) is scheduled to hold its April monetary policy meeting. On the 29th, the U.S. durable goods orders for March will be released. On the 30th, the U.S. Personal Consumption Expenditures (PCE) Price Index for March and the U.S. first-quarter Gross Domestic Product (GDP) will be published, alongside the U.S. April FOMC meeting. On May 1, Korea’s April exports, the U.S. Institute for Supply Management (ISM) Manufacturing Index for April, and China’s National Bureau of Statistics Manufacturing Purchasing Managers’ Index (PMI) for April will be released.

Researcher Na stated, "The U.S. FOMC meeting for April will be held over two days on the 28th and 29th, and the consensus among securities firms is that the policy rate is likely to remain unchanged. The key points to watch are the wording of the statement and comments from Fed Chair Jerome Powell regarding oil prices. As West Texas Intermediate (WTI) crude continues to trade between $80 and $100 per barrel-still high compared to last year-the focus will be on how the Fed addresses inflation risks stemming from oil prices. However, as the labor market remains stable and core inflationary pressures are limited, if international oil prices stabilize, the possibility of resuming rate cuts in the second half of the year remains open, which could have a positive effect on the stock market."

Corporate earnings announcements are also scheduled. In the U.S., Verizon will announce its results on the 27th, followed by Visa on the 28th, Alphabet (Google), Meta, Microsoft (MS), and Amazon on the 29th, and Apple and Eli Lilly on the 30th. In Korea, Samsung SDI, Hyundai Engineering & Construction, and HD Hyundai Electric will release their first-quarter results on the 28th, while Samsung Electro-Mechanics, LG Energy Solution, and Hanwha Aerospace will do so on the 30th.

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