[Edaily Reporter kyoungeun kim ] While U.S. stock markets edged lower amid ongoing geopolitical uncertainty between the U.S. and Iran—despite bargain-hunting in semiconductor stocks—South Korea’s stock market closed sharply lower the previous day after the sell-side “side car” mechanism was triggered. However, analysts note that factors supporting a rebound are accumulating in terms of valuation and supply-demand dynamics.

On the 21st, Han Ji-young, an analyst at KIWOOM Securities, assessed, “As U.S. airstrikes—carried out in retaliation for Iran’s re-blockade of the Strait of Hormuz on the 11th—have continued for the 10th consecutive day, the geopolitical conflict between the U.S. and Iran appears to be weighing on the stock market.”
However, he noted, “While it is true that the U.S.-Iran conflict is weighing on the market—especially given that the market’s resilience has weakened due to recent price corrections—the likelihood of the risk of war escalating further appears low.”
He noted, “According to foreign media reports, both the U.S. and Iran have confirmed their willingness to resume diplomatic negotiations, and neighboring mediating countries are also reported to have proposed a ceasefire on the 10th, indicating that there is still a possibility of resolving the situation.” He added, “Since earnings announcements from leading sectors such as Alphabet and Intel are scheduled for the second half of the week, the market’s sensitivity to U.S.-Iran tensions is expected to diminish as time goes on.”
One analyst stated, “Despite geopolitical uncertainty surrounding the U.S.-Iran situation, the domestic stock market is expected to attempt a rebound today, supported by a rebound in U.S. semiconductor stocks, improved foreign investor sentiment due to easing pressure on the won-dollar exchange rate, and buying interest driven by the perception that key sectors—including semiconductors—have been oversold.”
Commenting on the recent market environment, he said, “The KOSPI remains highly volatile, as evidenced by the fact that bidirectional side-car mechanisms were triggered a total of nine times over 13 trading days in July,” adding, “Given that circuit breakers have been triggered twice this month alone, it is difficult to view the current environment surrounding the domestic stock market as falling within normal parameters.”
He explained, “As can be seen from the volatility index (VKOSPI), which remains above the 80-point level, an environment of heightened volatility is expected to continue,” adding, “This is because market concentration remains strong, with the combined market capitalization of the top two semiconductor companies—SamsungElectronics and SK hynix—accounting for over 50% of the entire KOSPI.”
The fact that trading volume in single-stock leveraged ETFs accounts for approximately 40% of the total KOSPI trading volume is another factor contributing to the persistence of the volatile market; as of the 20th, the combined trading volume of 16 single-stock leveraged ETFs reached 43.4%.
However, one analyst noted, “Volatility encompasses not only downside risk, as seen recently, but also upside volatility, as experienced on several occasions during the first half of the year,” adding, “At this point, it is important to note that the probability of upside volatility emerging may be increasing.”
He explained, “The KOSPI’s forward price-to-earnings ratio (PER) remains below 6x, placing it in a historically undervalued range, and the upward trend in earnings consensus (a +6.8% change in the KOSPI’s 12-month forward operating profit since July) remains intact. Thus, from a fundamentals and valuation perspective, factors supporting a rebound are accumulating.”
One analyst also identified signs of a rebound in the supply and demand dynamics of single-stock leveraged funds. He noted, “The fact that the combined assets under management (AUM) of 16 single-stock leveraged funds currently stands at 9.1 trillion won—a 45% decrease from the peak of 16.5 trillion won—suggests that the intensity of domestic supply-and-demand volatility is subsiding.”
One researcher advised, “Ultimately, given current conditions—whether in terms of valuation, earnings, or supply and demand—this is a phase where we should expect a rebound after the market consolidates at the bottom rather than a further decline in the index,” adding, “We need to prioritize a strategy of gradually increasing our weightings through staggered purchases, focusing on semiconductors, which are the leading stocks that have recently experienced excessive declines.”