[Edaily Reporter Park Sun-Yeop ] Forecasts suggest that the KOSPI could rise to the 11,500 level during the third quarter despite increased short-term volatility. Analysts say the domestic stock market’s upward trend could resume as a combination of factors—including falling international oil prices following the U.S.-Iran ceasefire negotiations, the start of the second-quarter earnings season, and upward revisions to corporate profit forecasts—come into play.
Lee Kyung-min, an analyst at DaishinSecurities, stated in the “July Stock Market Outlook and Investment Strategy” report published on the 29th, “While we must take into account the growing pains involved in entering the 10,000-point era for the KOSPI, the index is expected to find support around the 8,000 level during periods of increased short-term volatility and seek to resume a full-fledged upward trend.”

The analyst maintained a bullish outlook for the stock market in July and August. He viewed it positively that, following the ceasefire negotiations between the U.S. and Iran, West Texas Intermediate (WTI) crude oil prices have fallen below $70 per barrel, which could ease inflation and interest rate pressures. He explained that if the decline in oil prices leads to a slowdown in June’s Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) inflation, global bond yields and the U.S. dollar could stabilize at lower levels, which could serve as a factor strengthening the upward momentum of global stock markets and the KOSPI.
Above all, earnings are the key factor for the stock market in July. DaishinSecurities projected that the second-quarter earnings season will kick off in earnest starting with Micron’s strong results, followed by the release of preliminary earnings by SamsungElectronics(005930) on the 7th. The earnings announcement by SK hynix(000660) scheduled for the 23rd is also expected to serve as a turning point for confirming semiconductor profitability and medium- to long-term demand.
The analyst stated, “The second-quarter earnings season will serve as an opportunity to resume and strengthen the upward trend based on upward revisions to earnings forecasts,” adding, “Considering the rate of change in semiconductor prices, Micron’s third-quarter earnings, and export momentum, expectations for Korean semiconductor earnings remain low.”
The analyst also raised the possibility of earnings improvements in sectors other than semiconductors. DaishinSecurities analyzed that while the second-quarter export growth rate excluding semiconductors rose from 9.0% to 11.5% compared to the previous quarter, expectations for operating profit in non-semiconductor sectors have fallen so low that a shift to negative growth is anticipated. Given the low earnings expectations, the firm believes that if non-semiconductor sectors also show signs of improvement during the second-quarter earnings season, the extreme concentration of the KOSPI could ease.
However, the firm believes it will be difficult to avoid volatility until the KOSPI enters the 10,000 era. Even after the U.S.-Iran negotiations, tensions surrounding the Strait of Hormuz could resurface, and the U.S. Federal Reserve’s (Fed) hawkish stance, inflation indicators, and a rebound in the Volatility Index (VIX) were cited as short-term headwinds. Another variable is the lingering concern over overheating in leading sectors, such as semiconductors, and the risk of overvaluation relative to earnings as the KOSPI breaks through the 9,000 mark.
However, the analyst predicted that these variables would likely remain limited to stimulating investor sentiment and supply-demand volatility rather than undermining the overall trend. “Fundamental drivers such as earnings and the economy remain solid and strong,” he explained, adding, “Increased volatility caused by oil prices, interest rates, and a rebound in the dollar presents an opportunity to increase exposure.”
From a valuation perspective, the KOSPI is also assessed to have re-entered an undervalued range. DaishinSecurities estimated that the KOSPI at the 8,000 level corresponds to a 12-month forward price-to-earnings ratio (P/E) of 7.31. The firm explained that this represents a “deep value” phase—falling below a forward P/E of 8—and an area of extreme undervaluation, even lower than the valuation lows seen during the COVID-19 pandemic. The 12-month forward earnings per share (EPS) rose from 1,015 points at the end of May to 1,093.8 points on the 26th. Analysts believe that even applying a forward P/E ratio of just 10 times to the current EPS level would make it possible for the KOSPI to enter the 10,000 era.
From a supply-and-demand perspective, the firm analyzed that selling by foreign investors and pension funds was primarily driven by portfolio rebalancing. In June, foreign investors were net sellers of 37.2 trillion won in the domestic stock market, while retail investors were net buyers of 37 trillion won, filling the supply gap. DaishinSecurities judged that if the won-dollar exchange rate stabilizes at a lower level, selling pressure from foreign investors would ease, and market leadership centered on financial investments could continue.
As an investment strategy, the firm proposed a strategy of accumulating leading stocks by capitalizing on volatility. It assessed that existing leading sectors—such as semiconductors, automobiles, secondary batteries, defense, shipbuilding, and machinery—could be used as opportunities for staggered buying during short-term corrections. However, it noted that a strategy of refraining from chasing the market when the KOSPI is above the 9,000 level and accumulating positions when it falls below the 8,500 level would be effective.
In the short term, the firm advised responding to rotational trading by focusing on sectors that are undervalued relative to their earnings or have been overlooked. Sectors identified as undervalued relative to earnings included healthcare, chemicals, shipbuilding, steel, telecommunications, machinery, construction, transportation, and cosmetics and apparel. For the internet, pharmaceuticals and biotech, cosmetics and apparel, and entertainment sectors, the firm believed it was possible to increase exposure by taking advantage of short-term price fluctuations even at current price levels.
The analyst stated, “There is no real benefit to selling during the period of increased volatility from late June to early July,” adding, “Rather, strategies that utilize this volatility to accumulate positions or hold steady are effective.” He further emphasized, “We are currently in a typical earnings- and macro-driven market,” noting that “strengthening economic and earnings momentum, along with upward revisions to outlooks, will be the driving forces behind the uptrend.”