[Edaily Reporter Park Sun-Yeop ] Forecasts indicate that the domestic stock market will continue to experience volatility in July, with the KOSPI fluctuating significantly within the 7,800–9,200 range. In the short term, the market could be shaken by concerns over concentration in the semiconductor and artificial intelligence (AI) value chains, as well as supply-and-demand instability caused by single-stock leveraged exchange-traded funds (ETFs); however, in the medium to long term, improving semiconductor earnings and the AI investment cycle remain the strongest investment drivers, according to analysts.
Kim Yong-gu, an analyst at Yuanta Securities Korea, stated in a report titled “July Stock Market Outlook and Strategy” released on the 30th, “In July, the KOSPI is expected to move within a neutral range between 7,800 and 9,200 points.” He noted that if the KOSPI falls below the 8,000 level, investors should increase their exposure to leading stocks in the semiconductor and AI value chains. Conversely, if the index rises above the 9,000 level, he advised that a strategy of rotating into oversold stocks—such as those in the financial, automotive, and retail sectors that possess earnings growth and value-up momentum—would be advantageous.

Researcher Kim cited the following as positive trend-driving factors for the market: a quasi-Goldilocks macroeconomic environment; an AI capital expenditure (Capex) supercycle driven by the convergence of fiscal policies in major economies and expanded AI capital investment; a surge in semiconductor exports and earnings; value-enhancement reforms such as the ban on dual listings and legislation to prevent stock price manipulation; and the inflow of funds from individual investors and households into the domestic stock market. In particular, he assessed that expectations—based on improvements in semiconductor exports and earnings—that this year’s KOSPI operating profit could jump to 1,100 trillion won and net profit to the 900 trillion won range are supporting the market’s bottom.
However, the report noted that it is unlikely the market will trend smoothly upward in July. Concerns are growing that the sharp short-term rise in the stock prices of leading semiconductor and AI companies has brought the market close to the threshold of past financial market bubbles. Furthermore, the report assessed that the market’s internal resilience has weakened due to a combination of factors: limited buying capacity among pension funds, investment trusts constrained by benchmark requirements, and retail investor demand concentrated on semiconductors. Furthermore, the so-called “tail wagging the dog” phenomenon—where single-stock leveraged ETFs amplify the price volatility of underlying assets—was identified as a factor likely to trigger volatility in the stock market in July.
Nevertheless, Analyst Kim viewed the likelihood of the correction surrounding leading semiconductor stocks escalating into a trend reversal as limited. This is because if SamsungElectronics(005930)and SK hynix(000660)deliver results that exceed market expectations during the second-quarter earnings season, the vicious cycle of stock price volatility and supply-demand imbalances could gradually ease. According to Yuanta Securities Korea, the consensus estimates for second-quarter operating profit stand at 86 trillion won for SamsungElectronics and 63.5 trillion won for SK hynix. Based on positive estimates, these figures could reach 99.6 trillion won and 71.4 trillion won, respectively.
Valuation pressures are also considered to be manageable. According to the report, as of the end of June, the 12-month forward PEG ratio for the MSCI Korea Index stood at 0.09x, the lowest among major global stock markets. The KOSPI’s 12-month forward price-to-earnings ratio (P/E) also stands at 8.1x, having fallen to a level close to the lower end seen when systemic risks materialized. Analyst Kim noted, “As long as expectations for a quantum leap in earnings and valuation appeal remain valid, the direction of this rollercoaster ride is up, not down.”
For the second half of the year as a whole, he projected that the KOSPI would continue its bull market trend within the 7,500–10,000 point range. He anticipated a pattern of higher lows and lower highs, with the index trading between 7,500 and 9,500 in the third quarter and between 8,000 and 10,000 in the fourth quarter. In the best-case scenario—where the AI capital expenditure cycle further boosts exports and earnings for Korea’s semiconductor and AI value chains—the firm believes the KOSPI could reach as high as the 12,000 level.
The firm suggested that portfolio strategies should vary depending on the index level. Below the 8,000 level, leading stocks in the semiconductor and AI value chains should be the core holdings, while at or above the 9,000 level, investors should target rotational buying in oversold sectors such as finance, automotive, and retail after taking profits on leading stocks.
In the KOSDAQ market, the firm noted that investors should also pay attention to semiconductor and AI materials, parts, and equipment stocks with strong earnings, which are expected to benefit from the launch of a premium segment and related indices in the second half of the year. Yuanta Securities Korea identified JUSUNG ENGINEERING Co.,Ltd., LEENO Industrial Inc., EO Technics Co.,Ltd., PSK INC., Eugene Technology Co.,Ltd., TES CO.,LTD., TSE CO.,Ltd., Koh Young Technology Inc., RFHIC CORPORATION, and Hana Materials Inc. as relevant stocks in this group.
Researcher Kim emphasized, “While diversification and caution can partially reduce risk and provide peace of mind, alpha opportunities will inevitably shrink as long as AI’s structural growth continues.” He added, “Unless the medium- to long-term value of AI and the earnings growth trend of the semiconductor value chain change, from a medium- to long-term strategic perspective, this remains a phase where investors who do not focus on semiconductors will be left behind.”