The KOSPI fell 21% from its June 19 intraday high of 9385 to an intraday low of 7387 on July 3, according to a report by Yuanta Securities researcher Heo Jae-hwan. The decline followed volatility that began in June after single-stock leveraged ETFs launched in late May. Heo noted that excluding the COVID-19 pandemic and US rate-hike cycles, KOSPI corrections exceeding 20% have been rare since 2020, and the index has now returned to its pre-ETF launch level of around 8228, indicating substantial resolution of overheating concerns.
KOSPI Returns to Pre-ETF Launch Level After 21% Decline
The KOSPI reached an intraday high of 9385 on June 19 before falling to 7387 on July 3, marking a 21% decline from the peak. Heo Jae-hwan of Yuanta Securities stated that the index has returned to approximately 8228, the level recorded before single-stock leveraged ETFs launched in late May. The researcher noted that KOSPI declines of 20% or more have been uncommon since 2020 when excluding the COVID-19 period and US interest rate hike cycles. A 20% decline from the high corresponds to a closing price of 7291, suggesting the price correction has largely run its course. Heo assessed that overheating concerns related to the ETF launches have been substantially resolved.
Samsung Electronics Preliminary Earnings and Elevated Market Expectations
Samsung Electronics is scheduled to announce preliminary earnings this week, with market expectations reaching elevated levels. Heo identified heightened expectations as a potential burden rather than a catalyst. In the US market, S&P 500 companies recorded a Q1 earnings per share (EPS) growth rate of 27%, significantly exceeding the initial forecast of 12%. Q2 EPS growth is projected at 22%. Heo explained that if actual results do not substantially exceed these elevated expectations, the market may interpret the outcome as momentum deceleration. KOSPI operating profit increased 26.5% last year, followed by 145% growth in Q1 and a projected 231% increase in Q2. Second-half growth rates are forecast at 215% in Q3 and 250% in Q4, though the pace of acceleration is expected to moderate compared to the first half.
Semiconductor Profit Growth Projected to Slow in Second Half
Semiconductor operating profit growth is projected to exceed 1000% in Q2 before slowing to a range of 400% to 700% in the second half, according to the report. Heo noted that "too strong" semiconductor earnings could become a burden. In contrast, KOSPI operating profit growth excluding semiconductors is expected to remain around 30% with minimal variation. The analyst suggested that interest may partially shift to non-semiconductor sectors in the second half, though no sector currently matches semiconductors in absolute profit scale. Heo identified steel, transportation, media, IT appliances, and telecommunications as sectors where second-half earnings reversals are anticipated. Consumer goods and financial stocks with relatively low earnings volatility may also attract increased attention.
US Big Tech Earnings Reports Scheduled for Late July
US Big Tech companies including Amazon, Alphabet, Microsoft, and Meta are scheduled to report quarterly earnings in late July. Heo assessed these reports as a more critical test than Samsung Electronics' preliminary results. Since 2023, these companies have maintained revenue and profit growth while continuing large-scale investments. Heo stated that whether these companies continue to increase earnings and raise investment plans for this year and next will determine whether the market attempts a recovery.
FAQ
What caused the KOSPI to fall 21% from its June high?
The KOSPI fell 21% from an intraday high of 9385 on June 19 to 7387 on July 3, following volatility that began in June after single-stock leveraged ETFs launched in late May. Yuanta Securities researcher Heo Jae-hwan noted that the index has returned to its pre-ETF launch level of around 8228, indicating substantial resolution of overheating concerns related to the ETF launches.
When are US Big Tech companies scheduled to report earnings?
US Big Tech companies including Amazon, Alphabet, Microsoft, and Meta are scheduled to report quarterly earnings in late July. Heo Jae-hwan of Yuanta Securities identified these reports as a more critical test than Samsung Electronics' preliminary results, stating that whether these companies continue earnings growth and raise investment plans will determine market recovery attempts.
What is the projected semiconductor profit growth rate for the second half?
Semiconductor operating profit growth is projected to exceed 1000% in Q2 before slowing to a range of 400% to 700% in the second half, according to the Yuanta Securities report. KOSPI operating profit growth excluding semiconductors is expected to remain around 30% with minimal variation.
