The domestic stock market is expected to attempt a rebound, led by semiconductor stocks, despite geopolitical uncertainties between the U.S. and Iran. Following a night of low-price buying in U.S. semiconductor stocks and a slight easing of the won-dollar exchange rate burden, there are rising expectations for improved foreign investor sentiment.
On July 20, the Dow Jones Industrial Average closed down 307.16 points (0.59%) at 51,839.26. The S&P 500 index, which focuses on large-cap stocks, fell 14.41 points (0.19%) to 7,443.28, while the tech-heavy Nasdaq Composite dropped 12.17 points (0.05%) to finish at 25,508.07.
The New York stock market started strong but reversed course amid growing concerns over potential military conflict between the U.S. and Iran. President Donald Trump warned of further retaliation against Iran in connection with U.S. military casualties, increasing geopolitical uncertainty and pressuring investor sentiment.
As tensions in the Middle East continue, international oil prices have also risen. September Brent crude futures settled at $89.22 per barrel, up 1.27% from the previous session. August West Texas Intermediate (WTI) crude futures increased by 0.90% to $83.23 per barrel.
However, optimism for a diplomatic resolution remains, and low-price buying has emerged in recently adjusted semiconductor and artificial intelligence (AI) stocks, limiting the extent of the index decline. Micron Technology rose by 1.94%, while AMD and Asterra Labs increased by 1.58% and 1.80%, respectively.
In the domestic market, the movement of large-cap semiconductor stocks is expected to influence the index's rebound. According to NextTrade, as of 8:06 a.m. on July 21, Samsung Electronics was trading at 246,000 won, down 2,000 won (0.82%) from the previous session. At the same time, SK Hynix recorded a drop of 16,000 won (0.91%) to 1,780,000 won.
Market analysts predict continued high volatility in the near term. The KOSPI has triggered sidecars nine times in the past 13 trading days, with six sell-offs and three buy-ins. The KOSDAQ has also seen seven sidecars activated during the same period, and circuit breakers have been triggered twice this month.
However, analysts note that the recent sharp decline in stock prices has reduced valuation burdens, and the outlook for earnings remains solid, creating conditions for a rebound. The KOSPI's 12-month forward price-to-earnings ratio (PER) has entered a historically undervalued range below six times. Since the beginning of the month, the KOSPI's 12-month forward operating profit forecast has been revised up by 6.8%, while the KOSPI has fallen by 23.1%, widening the gap between earnings and stock prices.
Han Ji-young, a researcher at Kiwoom Securities, stated, "Despite the geopolitical uncertainty between the U.S. and Iran, the rebound in U.S. semiconductor stocks and the easing of the won-dollar exchange rate burden could improve foreign investor sentiment. The domestic market is expected to attempt a rebound as buying pressure emerges from the perception of excessive declines in key sectors, including semiconductors."
The researcher emphasized the need to prioritize a strategy of gradually increasing positions in semiconductor stocks, which have seen excessive declines, and noted that the current conditions favor a rebound rather than further declines in the index, based on valuation, earnings, and supply-demand factors.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.