KOSPI Pauses at 2620 Level... Will Foreign Net Buying Continue? [Weekly Outlook]

The KOSPI index has settled at the 2600 level but has not surpassed the mid-point. This is due to profit-taking sell-offs after a steep rise from the 2200 level in just over a month. However, there is interest in whether the upward trend will continue as foreign investors' supply and demand show signs of turning into net buying.

On the 18th, NH Investment & Securities presented a forecast band of 2550-2690 for the KOSPI this week (19th-23rd). The forecast places more weight on the possibility of a decline rather than upward potential. On the last trading day of last week, the 16th, the KOSPI closed at 2626.87, up 5.51 points (0.21%) from the previous day.

Na Jeong-hwan, a researcher at NH Investment & Securities, said, "After the US-China tariff risk subsided, the stock price rose rapidly in a short period, followed by profit-taking sell-offs," adding, "If US economic indicators are announced favorably, there is a possibility that 'Good is Bad' may be interpreted, so caution is needed."

This is due to concerns that if economic indicators come out strong while US Treasury yields have jumped, expectations for a rate cut by the US Federal Reserve (Fed) may weaken further. On the 16th, the probability of a rate cut at the July Federal Open Market Committee (FOMC) regular meeting compiled by the CME Group FedWatch Tool was 35.9%, significantly down from 51.1% a week ago. Instead, the probability of a freeze expanded from 40% to 61.4%.

The inflow of foreign buying is a source of comfort. Foreigners have been net buyers of stocks on the KOSPI for eight consecutive trading days from the 7th to the 16th. Na Jeong-hwan, a researcher, said, "Since the US and China agreed to defer mutual tariffs, foreign buying has been observed in the KOSPI," adding, "Last week, the net buying scale of foreign investors was large in the order of semiconductors, shipbuilding, defense, and cosmetics sectors."

Events that could stir the stock market are also on standby.

Kang Jin-hyuk, a researcher at Shinhan Investment Corp., expected, "If a phone call between US President Donald Trump and Chinese President Xi Jinping is made over the weekend, it could act as an additional factor for the stock market to rise." Previously, President Trump hinted at the possibility of a phone call with Chinese President Xi Jinping this weekend while explaining the tariff war truce agreement with China.

The 'Computex 2025', the largest IT exhibition in Asia held in Taiwan, is also considered an event that could inject vitality into the stock market. In particular, Jensen Huang, CEO of Nvidia, is scheduled to deliver a keynote speech (19th) and hold a meeting (21st).

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The outlook of Lee Kyung-min, a researcher at Daishin Securities, that China's real economic indicators will be favorable to the stock market regardless of the outcome, also draws attention. Regarding the retail sales announced on the 19th, the researcher said, "Recently, the deflationary environment in China has continued, so market expectations for domestic demand are not high," adding, "If it exceeds expectations, recovery expectations due to stimulus policies may be introduced, and if it is worse than expected, expectations for additional stimulus policies may become stronger."

It is also advised to pay attention to the presidential candidate TV debates held on the 19th and 23rd. Researcher Kang Jin-hyuk said, "Theme-based rotational trading may appear depending on the pledges," adding, "It is necessary to pay attention to the detailed policies of each candidate by field."

Han Kyung-woo, Hankyung.com reporter case@hankyung.com