Following a nearly 5% plunge the previous day that chilled investor sentiment, a forecast has emerged that the KOSPI will oscillate within a trading range for the time being rather than find a clear direction. The analysis holds that despite Samsung Electronics' strong earnings, market attention has shifted to the semiconductor industry outlook for next year and beyond, and that uncertainty will persist until major big tech companies' investment plans are confirmed.
Shinhan Securities said in a report Tuesday that "from late July to early August, the market is in a phase of reflecting the information vacuum through price adjustments," and predicted that "the KOSPI will move between a lower band of 7,550-7,650 and an upper band of 8,300-8,400 going forward." The firm interpreted the current correction as a nature of expectation adjustment rather than earnings deterioration. Although Samsung Electronics' preliminary second-quarter results exceeded market estimates, investors' attention has already shifted to the memory chip outlook for the third quarter and 2027-2028.
Roh Dong-gil, research fellow at Shinhan Securities, said, "Even though Samsung Electronics posted a second-quarter operating profit of 89.4 trillion won, exceeding market expectations, the stock failed to gain momentum immediately after the earnings announcement." He added, "The shift of market attention from current earnings to next quarter's earnings is the factor explaining the recent volatility."
However, he said it is also difficult to conclude that this correction marks the beginning of a downward trend. Although the KOSPI has fallen about 16% since late June, the 12-month forward earnings per share (EPS) has instead increased, and he explained that it is appropriate to interpret the current correction as a discount on the sustainability of earnings rather than a downgrade in earnings.
As an investment strategy, he recommended reducing leverage and focusing on cash positions rather than aggressively expanding holdings. In particular, he forecast a high likelihood that the volatile market will continue until the AI investment plans of global big tech and the earnings guidance of semiconductor companies are confirmed, which are set to be released between late July and early August.
Roh said, "This is a market where it is difficult to push optimism, while at the same time there is little benefit in sharply tilting toward pessimism at the current index level." He added, "The market's future direction depends on whether companies' earnings forecasts continue to be revised upward."
