Where will the KOSPI head amid U.S.-Iran clashes…can it extend its record run? [Weekly outlook]

U.S. strikes on Iran…can the KOSPI extend its record run?

NH Investment & Securities: "This week’s KOSPI seen at 5,800–6,800"

Brokerages forecast that the KOSPI, which set fresh highs last week, will attempt further gains this week (3rd–6th), potentially rising as high as the 6,800 level. They cited momentum from export performance and the impact of the third revision to the Commercial Act. With the U.S. having launched a surprise strike on Iran last month on the 28th (local time) together with Israel, and with March 1 Independence Movement Day observed as a substitute holiday on the 2nd, attention is focused on whether the KOSPI can sustain additional gains through the rest of the week.

Experts advised maintaining exposure to large-cap semiconductor stocks such as Samsung Electronics and SK HynixInc., which led the index’s strong advance. They view recent net selling by foreigners in the two names as profit-taking rather than a signal of a step-by-step reduction in positions.

NH Investment & Securities on the 1st presented a projected KOSPI trading range of 5,800–6,800 for this week. Analyst Na Jeong-hwan of the brokerage pointed to debate over artificial intelligence (AI) profitability and profit-taking as downside factors, but said the Commercial Act revision and strong exports in semiconductors and other areas should provide support.

The KOSPI showed significant volatility last week. In particular, it closed at 6,307.27 on the 26th, reaching the 6,300 milestone for the first time ever. The next day, the 27th, it surged as high as 6,347.41 intraday to set another record, but lacked follow-through and finished the session around the 6,240 level.

As semiconductor shares continue to rise and the KOSPI keeps notching new highs, brokerages are advising investors not to cut semiconductor exposure.

Na said, “Of this year’s KOSPI consensus net profit of KRW 457 trillion, Samsung Electronics and SK Hynix account for KRW 257.6 trillion, or 56%,” adding, “While the two stocks have risen rapidly, in a phase where semiconductor earnings—driving more than half of the KOSPI’s net profit—are expanding, it is necessary to maintain exposure to large-cap semiconductor leaders.” He continued, “Foreigners have been net sellers of the two names recently, but they are maintaining an overweight stance on semiconductors, so this selling is interpreted as profit-taking on some excess gains.”

Attention is also on Korea’s February export figures to be released that day. Exports for Feb. 1–20 rose 23.5% from a year earlier. Despite fewer working days in February, the figure exceeded the same period in January (up 14.9%), with a strong, semiconductor-led trend continuing.

Some warn that momentum in Commercial Act revision-related stocks could fade now that the third revision has passed, on the view that the catalyst has been exhausted. However, Na advised it remains worth watching, saying, “Ahead of the March shareholders’ meeting season, shareholder proposals may increase and demands for shareholder returns could intensify, especially among companies with large treasury shareholdings.”

Earnings momentum is also still in play. This week in the U.S. market, results are due from Best Buy (3rd), Broadcom (4th), and Costco (5th). Na said, “With Nvidia delivering solid earnings, the ‘AI disruption’ narrative in the U.S. market has also eased somewhat,” adding, “This is a phase where the likelihood of a rebound is rising for the M7, which have been trending lower since last November, as well as for oversold IT software names.”

NH Investment & Securities named semiconductors (Samsung Electronics), brokerages (Mirae Asset Securities), holding companies (LS), ESS (LG Energy Solution), chemicals (Kumho Petrochemical), retail (Shinsegae), and healthcare (Celltrion) as sectors and stocks of interest.

Na said, “Both institutions and foreigners are gradually increasing exposure to healthcare, IT consumer electronics (secondary batteries), and transportation, so it is necessary to pay attention to related stocks.”

Still, the market is watching the impact on Korean equities as the U.S. and Israel have carried out sweeping air strikes targeting Iran’s core military and political facilities. Concerns have grown that Iran could immediately launch simultaneous strikes on Israel proper and U.S. bases in the Middle East, pushing the region into uncontrollable turmoil.

The attack was carried out shortly after the third round of nuclear talks held in Geneva, Switzerland on the 26th ended with “no deal.” The U.S. demanded what it called a “package deal,” including reducing uranium enrichment to 0%, returning 300 kg of already enriched uranium, dismantling key nuclear facilities (Fordow, Natanz, Isfahan), curbing missile range, and halting support for proxy forces. However, after Iran defined the demands as an infringement on sovereignty and a call for disarmament and rejected them, analysts say the Trump administration abandoned a diplomatic solution and moved to use force. According to The Washington Post (WP), when asked—regarding the U.S. military attack on Iran—what “legacy” of the administration he hoped would result from the attack, U.S. President Donald Trump said, “All I want is freedom for those people (the Iranian people).”

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com