Next week, the domestic market is expected to navigate significant events, including the U.S. Personal Consumption Expenditures (PCE) price index and the Bank of Korea's monetary policy committee meeting.
According to the Korea Exchange, the KOSPI index rose by 32.12 points (0.41%) to close at 7847.71 on May 22. Over the week from May 11 to 15, the KOSPI and KOSDAQ indices increased by 4.73% and 2.77%, respectively.
This week, the domestic market experienced sharp fluctuations due to profit-taking following the KOSPI's breach of the 8000 mark and concerns over interest rates. Negotiations between the U.S. and Iran have stalled, leading to a surge in international oil prices, while expectations for a rate cut by the U.S. Federal Reserve have diminished, dampening investor sentiment. Particularly, U.S. inflation data came in higher than expected, prompting the market to begin factoring in the possibility of interest rate hikes later this year.
Concerns over a potential strike due to labor disputes at Samsung Electronics have also been cited as a factor increasing market volatility. However, by the end of the week, Samsung's management and labor reached a tentative agreement, and NVIDIA reported results and guidance that exceeded market expectations, helping to restore investor confidence in semiconductor stocks.
In terms of supply and demand, retail and institutional investors net purchased 8.335 trillion won and 5.694 trillion won, respectively, while foreign investors net sold 14.307 trillion won. Analysts suggest that the outflow of foreign capital is more indicative of profit-taking following the semiconductor surge rather than a structural sell-off.
Next week, several major macro events are scheduled. On May 25, stock markets in Korea, Hong Kong, the UK, and the U.S. will be closed. On May 27, single-stock leveraged ETFs for Samsung Electronics and SK Hynix will be listed in Korea for the first time. The U.S. PCE price index for April and the Bank of Korea's monetary policy committee meeting are set for May 28, followed by the MSCI quarterly rebalancing on May 29. The American Society of Clinical Oncology (ASCO) 2026 conference will also take place from May 29 to June 2.
The U.S. PCE price index is viewed as a key variable that could influence short-term market direction, especially given the recent rise in international oil prices and concerns over inflationary pressures, which have increased uncertainty regarding Federal Reserve policy. According to Bloomberg consensus, the U.S. April headline PCE is expected to rise by 3.9% year-on-year, while core PCE is projected to increase by 3.3%.
Jung Ye-kyung, a researcher at NH Investment & Securities, noted, "The recent rise in core Consumer Price Index (CPI) was significantly influenced by noise in rental statistics, so changes in housing costs may be limited in the PCE price index. However, market volatility could persist depending on oil prices and interest rate trends."
Market attention is also focused on the outcome of the Bank of Korea's monetary policy committee meeting. While many expect the benchmark interest rate to remain unchanged, there are forecasts that a hawkish stance could strengthen due to recent trends in exports and domestic demand recovery, as well as inflationary pressures from high oil prices.
Analysts believe that while short-term volatility is likely to continue, the attractiveness of earnings and valuations remains intact. They emphasize that the ongoing AI investment cycle and upward revisions in semiconductor profit estimates suggest limited risk to leading stocks.
Na Jeong-hwan, a researcher at NH Investment & Securities, stated, "In a volatile market, the key factors are ultimately earnings and valuations. The current KOSPI forward price-to-earnings ratio (PER) is significantly below the average of the past decade, indicating that valuation attractiveness remains high. With the robustness of the AI infrastructure investment cycle reaffirmed, the investment appeal of sectors related to memory semiconductors and AI infrastructure is expected to stand out."
* This article has been translated by AI.
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