KOSPI within striking distance of 5,000… could it swing on the fallout from ‘Greenland tariffs’? [Market Preview for Today]

Concerns intensified on the 21st over whether the KOSPI can hit “5,000p (KOSPI index 5,000).” After the index turned lower for the first time in 13 sessions the previous day, Wall Street tumbled overnight on the fallout from the so-called “Greenland tariffs.”

The KOSPI closed down 0.39% at 4,885.75. After seesawing during the session, the index briefly climbed to 4,935.48 in the afternoon to set a fresh all-time high, but reversed course late in the day. The year-to-date rally that had continued day after day was finally checked.

Retail investors were net buyers of KRW 354.6 billion and foreigners bought a net KRW 71.7 billion, while institutions were net sellers of KRW 607.7 billion. Most large-cap names by market cap were weaker, including Samsung Electronics (-2.75%), SK hynix (-2.75%), Hyundai Motor (-0.21%), and Samsung Biologics (-0.05%), while LG Energy Solution rose 1.13%.

The KOSDAQ ended up 0.83% at 976.37, the highest level in four years since Jan. 13, 2022. Foreigners and institutions were net buyers of KRW 6.4 billion and KRW 284.0 billion, respectively, while retail investors were net sellers of KRW 259.7 billion.

US equities, a key barometer for Korean stocks, also swung sharply overnight. As the United States and the European Union (EU), locked in a dispute over Greenland, exchanged tariff threats, all three major Wall Street indexes plunged. The Dow Jones Industrial Average fell 1.76%. The S&P 500 dropped 2.06%, and the Nasdaq Composite slid 2.39%.

Big Tech stocks with market capitalizations above USD 1 trillion all declined. Nvidia and Tesla fell in the 4% range, while Apple, Amazon, Alphabet, and Meta also dropped about 3%. The Philadelphia Semiconductor Index slipped 1.68%. While sectors including tech, financials, communication services, real estate, and consumer discretionary declined, consumer staples stocks rose.

US President Donald Trump announced tariffs targeting eight European countries that have deployed troops to Greenland. A 10% tariff will take effect from the 1st of next month, rising to 25% from June 1. In response, the EU said it would impose tariffs on US goods worth EUR 93 billion.

The EU is also considering activating its Anti-Coercion Instrument (ACI). The ACI is a mechanism triggered when a third country outside the EU applies economic pressure on the EU or a specific member state. Measures include restrictions on trade and investment, limits on financial services activities and bans on participation in public procurement, and curbs on intellectual property protection.

With Trump-driven uncertainty rising, volatility in the Korean market is also expected to be elevated today. Han Ji-young, a researcher at Kiwoom Securities, said that “during the session, ‘risk-off selling’ and ‘buying on dips’ are likely to collide, particularly in sectors that have risen sharply,” adding that “as sensitivity to negative headlines increases, flow-driven volatility could rise in leadership sectors such as autos, utilities, shipbuilding, and semiconductors, where early-year crowding has occurred.”

Still, with the KOSPI’s valuation (price level relative to earnings) not yet high and profit growth solid, the uptrend is likely to continue. Han noted that “as of January, the KOSPI’s 12-month forward operating profit growth stands at 61.7% year on year,” and explained that “because earnings fundamentals remain solid, any subsequent correction pressure would likely only generate day-to-day volatility accompanied by profit-taking, rather than lead to a trend reversal.”

Reporter Yang Ji-yoon yang@hankyung.com