Kospi Set to Test 8,000 This Week After Holiday, Brokerages Say

Brokerages expect the Kospi to make another push to settle above 8,000 this week.

NH Investment & Securities said on May 24 that the benchmark is projected to trade between 7,200 and 8,500 this week. The Kospi closed at 7,847.71 on May 22, up 32.12 points, or 0.41%, from the previous session. South Korean markets will be closed on May 25 for the substitute holiday for Buddha's Birthday after a volatile week for domestic equities.

Recent swings in the market have widened amid issues including a strike by Samsung Electronics' labor union, NH Investment & Securities analyst Na Jung-hwan said. Still, earnings and valuations remain the key gauges in a volatile market, he said. When the Kospi fell to an intraday low of 7,053 on May 19, its forward price-to-earnings ratio was 7.8 times, near a historical low.

As second-quarter earnings season approaches, market attention is set to shift from macro uncertainty to fundamentals, bringing earnings momentum back into focus, Na said. Combined with attractive valuations, that could help stocks regain upward traction.

Daishin Securities analyst Lee Kyung-min said international oil prices could fall to the low $80s a barrel if the US and Iran reach a peace agreement and traffic through the Strait of Hormuz resumes. That process would help stabilize bond yields and the dollar, reviving risk appetite in global financial markets, he said. In that environment, the Kospi could stage a strong advance as the second-quarter earnings season gets underway.

Investors are also focused on the launch this week of single-stock leveraged and inverse exchange-traded funds.

Sixteen single-stock leveraged and inverse ETFs tied to names including Samsung Electronics and SK Hynix will be listed simultaneously in South Korea for the first time on May 27, Na said. With Nvidia's strong earnings supporting sentiment toward investment in AI semiconductors, pent-up demand could be substantial.

While the new products overlap with existing leveraged ETFs, their effect on the market's overall direction should be limited, he added. They could, however, increase volatility at the close.

With inflation concerns weighing on equities recently, investors are also watching the US personal consumption expenditures price index for April due on May 28. Consensus forecasts call for core PCE to rise 3.3% from a year earlier, compared with 3.2% in March, Na said. That would match the 0.1 percentage-point increase seen in core consumer price inflation, suggesting inflation worries are unlikely to intensify.

Lee Su, Hankyung.com reporter 2su@hankyung.com