Kospi Pauses After Topping 8,000 as Focus Shifts to Nvidia, Samsung Electronics

NH Investment & Securities sees the Kospi trading between 7,200 and 8,100 this week

The Kospi is entering a consolidation phase this week, from May 18 to May 22, as investors weigh domestic and external risks including the war in the Middle East and a strike at Samsung Electronics. Brokerages cited Nvidia's earnings and lower oil prices as potential support, while a Samsung strike and profit-taking were seen as downside risks.

NH Investment & Securities said on May 17 that it expects the Kospi to move in a range of 7,200 to 8,100 this week. Na Jung-hwan, an analyst at the brokerage, said a key positive factor ahead of Nvidia's earnings release on May 20 is the issue of approval for sales of its H200 artificial intelligence chip in China. If supply resumes to major Chinese companies such as Alibaba and Tencent, Nvidia's China revenue, which had been excluded, could be incorporated into estimates again.

The market's main focus in Nvidia's earnings report is whether the company's outlook reflects revenue from China. Investors are also watching whether strong demand for Nvidia's Blackwell AI chips will continue and how much production and supply bottlenecks have eased. The company's explanation of whether any rise in China sales would be temporary or part of a sustained trend is also drawing attention.

A possible strike at Samsung Electronics is also seen as a major variable for the Kospi. Na said Samsung's semiconductor division is known to have begun cutting production. A labor agreement would raise costs, while a strike could disrupt output, making either outcome a potential drag on Samsung's earnings. He advised investors to diversify into blue-chip stocks with earnings momentum if volatility in Samsung shares increases because of the strike.

Yuanta Securities said the impact of a Samsung strike has already been priced into the stock and could instead present a buying opportunity. Lee Jae-won, an analyst at the brokerage, said Samsung's earnings outlook could improve further if strike-related uncertainty does not drag on. Samsung shares, which have lagged other semiconductor stocks, may also rise belatedly and move back in line with the broader market average.

From an investment strategy standpoint, brokerages said it remains effective for now to keep an overweight position in market leaders such as semiconductors. Still, after the recent sharp rally, investors also need to prepare for rotation into companies whose shares have fallen significantly but whose earnings remain solid.

Daishin Securities cited rechargeable batteries, cosmetics, defense and shipbuilding as sectors with attractive valuations and expected earnings improvement this year. The brokerage said investors seeking returns above the market average should look for new opportunities in these undervalued sectors.

Further profit-taking remains an overhang. On May 15, the previous trading day, the Kospi and Kosdaq each plunged more than 6% and 5%, respectively. The Kospi topped the 8,000 mark during the session but closed at 7,493.18, down 488.23 points, or 6.12%, from the previous day, as profit-taking emerged. US stocks also fell in the following New York session. The move reflected selling centered on technology shares as investors locked in gains. The Dow Jones Industrial Average closed down 537.29 points, or 1.07%, at 49,526.17. The S&P 500 fell 1.24%, while the tech-heavy Nasdaq Composite dropped 1.54%.

Kang Jin-hyuk, an analyst at Shinhan Securities, said tensions in the Middle East intensified again after US President Donald Trump delivered a hard-line warning to Iran. As sentiment improved around US-China relations, expectations also faded somewhat for Korean companies that had been viewed as beneficiaries of supply-chain decoupling. That helped drive heavy foreign and institutional selling in large-cap stocks such as Samsung Electronics and SK Hynix, sharply shaking the broader market.

Kang Kyung-joo, Hankyung.com reporter qurasoha@hankyung.com