The first half of 2025, which delighted retail investors in the domestic stock market, has come to an end. The Korea Composite Stock Price Index (KOSPI) soared approximately 35% in just 2.5 months after hitting a low on April 9, entering the 3000 range. Now, market participants' attention is focused on whether the momentum from the first half can continue into the second half. Let's take a look at a few factors that could influence market trends.
First of all, given that the KOSPI has surged short-term, a technical correction may occur. It is important to remember that it could be exposed to fluctuations, both big and small. The tariff risk stemming from former President Trump remains. Attention should be paid to the outcomes of country-specific negotiations when the 90-day reciprocal tariff suspension deadline set by the U.S. expires on July 9.
In the case of the proposed amendment to the Commercial Act, which is likely to be addressed in a plenary session this month, it is a positive sign in itself, but one must keep in mind that the expectations have already been reflected in the market. If it falls short of expectations, it could actually provide an opportunity for short-term correction.
The fact that the second-quarter earnings season is about to begin also adds uncertainty. According to financial information provider FnGuide, the estimated annual operating profit for 191 KOSPI-listed companies, where three or more institutions have provided earnings consensus, is 265.7114 trillion won. This is a 6.4% downward adjustment from the estimate of 284.063 trillion won six months ago.
Kim Yong-gu, a researcher at Yuanta Securities Korea, remarked on the recent rise in the stock market, saying, "The rally was driven solely by expectations related to improvements in mid- to long-term economic and market conditions, without improvements in net profit margins or return on equity (ROE). As the market continues to rise, the potential for stock price, valuation, and liquidity fatigue is likely to increase, and the market is expected to react more sensitively to changes in domestic and external variables."
Experts agree that when looking ahead to the entirety of the second half, bullish forecasts remain valid regardless. This is because a re-rating of valuations is expected to drive the stock market. KB Securities stated that it maintains a positive outlook on its top sectors for the year, which are finance, nuclear power, and defense. Lee Eun-taek, a researcher at KB Securities, noted, "A correction due to the surge is possible, but it can be addressed through additional purchases."