Both the KOSPI and KOSDAQ indices remained stagnant. The KOSPI index started at 3191.11 last week (July 21-25) and rose to 3237.97 during the week, reaching a year-to-date high, but ultimately closed slightly higher at 3196.05. The KOSDAQ index also hovered above the 820 mark before retreating and had to settle for maintaining the 800 level.
As the tariff deadline (August 1) set by the Donald Trump U.S. administration approaches, the inability to finalize trade negotiations has had a considerable impact.
The flow of the stock market this week (July 28 - August 1) is expected to be influenced by the results of the trade negotiations (or turmoil during that process). If no results are achieved, the Trump administration may immediately impose a mutual tariff of 25%. Specifically, as Japan has reduced its mutual tariff rate to 15% through large investments in the U.S. and opening its rice market, domestic corporations may find themselves in an unfavorable situation.
Minister of Trade, Industry and Energy Lee Jeong-kwan is meeting with U.S. Secretary of Commerce Howard Lutnick to build a consensus aimed at reaching an agreement before the deadline, leaving the possibility of a dramatic conclusion open.
Due to increasing uncertainty, there are opinions recommending sectors centered on domestic consumption rather than export stocks, which are heavily affected by tariff issues. Na Jeong-hwan, a researcher at NH Investment & Securities, noted, "At this point when the tariff crisis is prominent, I prefer domestic consumption-related stocks," adding, "Particularly, private consumption in Korea showed signs of recovery in the second quarter (April-June), and the issuance of consumption coupons for the public is favorable for domestic consumption stocks."
The Federal Open Market Committee (FOMC) meeting will be held from the 29th to the 30th. The market anticipates that interest rates will remain unchanged this time as well, because Jerome Powell, chair of the Federal Reserve, is maintaining his stance that the impacts of tariffs on prices must be determined.
However, President Trump is uncharacteristically pressuring Chair Powell for an interest rate cut by visiting the Federal Reserve headquarters. The possibility of a 'shadow chair' is also being frequently mentioned, which is why the market could be influenced depending on Powell's speech.
The government's first tax reform plan under President Lee Jae-myung will also be revealed. The core issue is the conditions and tax rates for 'dividend income separation taxation,' which divides dividends from comprehensive income and taxes them separately.
The government is currently reviewing a plan to implement separate taxation on dividend income with a maximum tax rate set at 30%. Under current law, financial income such as dividends and interest (when exceeding 20 million won) is subject to a maximum progressive tax rate of 49.5%.
However, Jin Seong-jun, the Democratic Party of Korea's policy committee chief overseeing the ruling party's policies, has raised a 'cautious opinion' regarding the separate taxation of dividend income, which may change the conditions. This could affect the stock prices of dividend stocks that have shown a steep rise due to expectations of separate taxation on dividend income.
Whether to revert the basis for imposing capital gains tax on major shareholders to a holding amount of 1 billion won per stock from the current 5 billion won is also a key point in the tax reform plan. This could induce sell-offs of stocks that have significantly risen in price, as investors seek to avoid being designated as major shareholders ahead of the year-end.
In addition, there is a strong possibility that the tax reform plan will include increasing the securities transaction tax rates. This is because the securities transaction tax rates were gradually reduced in preparation for the introduction of the financial investment income tax, which has since been abolished before its implementation.
Kang Jin-hyuk, a researcher at Shinhan Investment & Securities, stated, "Given the gap between market expectations and the government's position, there is a possibility of the release of supply after the public disclosure of the reform plan," adding, "In particular, there might be distinguishing of stocks related to policies in the financial and holding sectors."
The second quarter earnings announcements of major domestic corporations will also continue. In particular, Samsung Electronics, the largest company by market capitalization in Korea, will reveal specific details regarding its second quarter results for this year on the 31st. Previously, Samsung Electronics announced an estimated operating profit of 4.6 trillion won for the second quarter, which fell below market expectations.
▲On the 28th, Doosan Robotics and Hyundai AutoEver, ▲on the 29th, Hanwha Ocean, Hanwha System, and Korea Aerospace Industries, ▲on the 30th, Samsung C&T and Hanwha Solutions, and ▲on the 31st, Hanwha Aerospace, among others, are scheduled to consecutively release their earnings. Even within the shipbuilding, defense, and construction sectors that showed strong performances in the first half of the year, stock differentiation may occur.