[Edaily Reporter Park Sun-Yeop ] Although the domestic stock market has recently been experiencing sharp fluctuations without any clear negative catalysts, analysts say it is too early to conclude that the bull market has ended. While concentration on large-cap semiconductor stocks and single-stock leveraged exchange-traded funds (ETFs) have amplified volatility, the assessment is that, considering corporate earnings outlooks and monetary policy conditions, the conditions to end the upward trend have not yet materialized.
Na Jeong-hwan, an analyst at NH INVESTMENT & SECURITIES, stated in a report on the 20th, “Although signs of a market peak are emerging, the slowdown in earnings growth and liquidity tightening—which would trigger the end of the bull market—have not yet been confirmed,” adding, “For the time being, the trend of funds flowing into sectors where stable earnings can be confirmed is likely to continue.”

The KOSPI rose 101% in the first half of this year alone, but after hitting a high last month, it fell 25.2% to 6,820, its closing price on the 16th of this month. Unlike in the past, when it typically took several months for the index to fall more than 20% from its peak, this time the plunge occurred in just two weeks. It is also unusual that, unlike during the financial crisis or the COVID-19 pandemic, there were no clear negative factors to explain the decline.
Market volatility has also surpassed levels seen during past crises. The VKOSPI, the volatility index for the KOSPI 200, surged to 96.9 at the end of last month, exceeding both the peak of 89.3 during the 2008 financial crisis and the 69.2 recorded during the COVID-19 pandemic.
The divergence in stock prices among individual stocks has also become extreme. An indicator measuring how much individual stock returns deviated from the market average reached 39.6 percentage points for large-cap stocks at the end of May. This was higher than the 32.6 percentage points for mid-cap stocks and the 26.2 percentage points for small-cap stocks. While small- and mid-cap stocks typically exhibit greater volatility due to numerous individual issues, this time the gap in returns among large-cap stocks widened further as buying momentum concentrated on semiconductor stocks.
Single-stock leveraged ETFs were also identified as a factor amplifying volatility. These products— SamsungElectronics(005930)or SK hynix(000660) —must purchase additional shares of the underlying stock to meet their target return when the stock price rises, and sell them when the price falls. Since trading occurs in the same direction as the underlying stock’s movements, this structure amplifies both gains and losses.
However, analysts noted that it is difficult to view the current concentration in semiconductor stocks solely as a bubble. SK hynix’s rise last month—when it briefly surpassed SamsungElectronics in market capitalization based on common stock—resembles the situation in 1999 when Korea Telecom overtook SamsungElectronics. This is because expectations for new technology, concentration in a small number of large-cap stocks, and a shift in the market leader all occurred simultaneously.
However, the concentration on telecom stocks in 1999 lacked the earnings to support share prices. In contrast, earnings driven by demand for artificial intelligence (AI) and high-bandwidth memory (HBM) are currently underpinning the rise in semiconductor stocks. Based on this year’s earnings forecasts, SK hynix’s operating profit margin stands at 76.7%, surpassing SamsungElectronics’ 51.8%. SamsungElectronics and SK hynix also account for 71.2% of the KOSPI’s total net income, which is higher than their combined market capitalization share of 54.9%.
Historically, bull markets have typically ended when corporate profit growth slowed and the U.S. Federal Reserve began tightening monetary policy. Analyst Lee believes that, at present, profit forecasts for domestic companies are still being revised upward, and it is difficult to conclude that monetary policy has entered a full-fledged tightening phase.
As investment targets, he first suggested AI infrastructure sectors such as semiconductors and power equipment. These are sectors where supply becomes increasingly scarce as AI investment grows, allowing investors to secure both pricing power and earnings visibility.
He also highlighted energy and securities as sectors of interest, as their stock prices have lagged behind earnings growth. The analysis suggests that, excluding semiconductors, these two sectors contribute significantly to KOSPI earnings growth but have not yet been fully reflected in their market capitalization growth.
Premium consumption, centered on department stores and hotels, also drew attention. This is because the weak won has made domestic luxury goods more competitive, leading to a simultaneous influx of domestic consumer spending and shopping demand from foreign tourists. The analyst projected that hotel and tourism spending would expand in the second half of the year as the number of foreign visitors increases seasonally.
Researcher Na stated, “As volatility increases, investors prefer certain near-term gains over uncertain returns in the distant future,” adding, “Until the profit growth trend slows and liquidity tightening becomes evident, AI infrastructure, undervalued earnings-driven stocks, and premium consumption sectors will serve as viable alternatives.”