"Keep holding stocks… the Kospi will push higher while wobbling around 6,000" [Today’s Market Preview]

As the Kospi has been repeatedly hitting fresh record highs, attention is growing over the market’s next direction. With the benchmark surging more than 46% so far this year, concerns are mounting about the possibility of a short-term correction.

According to the Korea Exchange on the 27th, the Kospi closed the previous day at 6,307.27, up 3.67%. The Kosdaq also ended 1.97% higher at 1,188.15. During the session, the Kospi climbed as high as 6,313.27 to reset its all-time high. Institutions bought KRW 1.2427 trillion worth of shares in the main board market, while retail investors snapped up KRW 661.0 billion. Foreigners sold KRW 2.1077 trillion. Samsung Electronics (7.13%) and SK Hynix (7.96%) both posted new record highs.

Retail investors bought Samsung Electronics the most that day (KRW 1.0750 trillion), followed by SK Hynix (KRW 336.0 billion), Samsung Electronics preferred shares (KRW 136.0 billion) and SK Square (KRW 58.0 billion). Institutions also made their biggest net purchases in SK Hynix (KRW 492.0 billion) and Samsung Electronics (KRW 348.0 billion). They also showed interest in Kakao (KRW 125.0 billion) and Hyundai Motor (KRW 107.0 billion). Foreigners were net buyers of Hanmi Semiconductor (KRW 192.0 billion), Kakao (KRW 171.0 billion) and LG Innotek (KRW 85.0 billion), in that order.

With an unprecedented bull market continuing, anxiety is rising. According to the Korea Exchange, the Kospi 200 Volatility Index (VKOSPI) has risen for eight consecutive sessions. While brokerages say a short-term pullback could emerge, they advise that selling too hastily may be disadvantageous. Han Ji-young, a researcher at Kiwoom Securities, said, "The pace of gains is unprecedented, and even overseas investors are surprised by the momentum in the Korean market," adding, "Given the valuation of the domestic stock market (stock price levels relative to earnings), it may be advantageous to continue holding stocks at the current levels."

The Kospi is expected to open lower, weighed by weakness in U.S. semiconductor shares. Major U.S. stock indexes were mixed on the 26th (local time). The Dow Jones Industrial Average ended up 0.03% at 49,499.20. The S&P 500 and Nasdaq fell 0.54% and 1.18%, respectively. With Nvidia dropping more than 5%, the Philadelphia Semiconductor Index slid 3.19%. Selling is seen as having been triggered by concerns that Nvidia’s results were already priced in and that it will be difficult for them to come in even stronger going forward.

Tom Graff, chief investment officer (CIO) at Facet, said, "Nvidia is facing a dual situation of lofty expectations already reflected in the stock price and a skeptical market," adding, "Taking that into account, it is highly likely that at least the next few quarters could be a bumpy period." By sector, financials rose 1.29%. Industrials, energy and real estate were also strong.

Experts say that during a market pullback, it is advantageous to focus on solid names. Jung Hae-chang, a researcher at Daishin Securities, said, "If short-term swings appear during an earnings vacuum, it is advantageous to keep an eye on stocks with robust earnings momentum," adding, "It is also a good idea to closely watch sector rotation in semiconductors, displays, energy and utilities, as well as sectors such as telecoms, retail and distribution where expectations for Commercial Act revisions are likely to be reflected."

Some analysis suggests the index’s uptrend will continue. Jung added, "Profit forecasts for the semiconductor sector are being revised upward, so the trend of the Kospi’s all-time-high move is unlikely to change," and "A different pattern is continuing from past rallies driven by liquidity."

Reporter Cho Ara rrang123@hankyung.com