On Mar. 23-27, the KOSPI fell to the 5,400 level. This week (Mar. 30-Apr. 3), the market is also expected to be heavily affected by geopolitical risks in the Middle East surrounding the Iran war. With U.S. indicators such as employment set for release, it is necessary to check how the war has affected the economy.
Last week, the war situation between the United States and Iran and the impact of the new technology "TurboQuant" released by Google Research increased volatility in the domestic stock market. The KOSPI started at 5,781.20 and dropped to 5,431.14, falling more than 6%, and the KOSDAQ also fell nearly 2%. With the emergence of TurboQuant, an artificial intelligence (AI) model that significantly reduces memory usage, concerns that demand for semiconductor memory could decline sent Samsung Electronics and SK hynix plunging 9.88% and 8.44%, respectively.
In particular, selling by foreign investors stood out. Last week, foreigners recorded net selling of 14 trillion won in the Korea Exchange's main market. It was a seven-session streak of "sell" since the 19th.
In the securities industry, the prevailing view is that large swings in stock indexes will continue depending on Middle East issues and the paths of oil prices and interest rates. The saving grace is that the U.S.-Iran war has entered a negotiating phase.
Lee Eun-taek, a KB Securities researcher, said, "This Iran situation shows a pattern similar to a 'tariff war.' A complete agreement may be impossible, but as with tariff talks, not every condition needs to be met for the shooting to stop," and added, "While the risk of further deterioration is high, it will track a 'W-shaped rebound.'"
There is also some room for the "TurboQuant" shock, which dealt a considerable blow to domestic and overseas stock markets, to ease. TurboQuant is a new technology that can drastically reduce memory demand, but some said the assessment is excessive. Na Jeong-hwan, a NH Investment & Securities researcher, explained, "In the DeepSeek case, the possibility of developing low-cost, high-efficiency AI came to the fore and there was a short-term stock correction, but AI development and capital expenditures (CAPEX) continued," and added, "Recent concerns about reduced memory-semiconductor demand due to TurboQuant are excessive."
A slew of economic indicators are also scheduled. On Apr. 1, Korea's March export-import figures will be released, and the U.S. ISM manufacturing index will also come out. On the 3rd, U.S. employment data will be released. Na said, "Ahead of Samsung Electronics' preliminary first-quarter results on the 7th, expectations for growth in semiconductor exports could expand," and added, "At the same time, we need to check whether U.S. ISM manufacturing orders remain in expansion above 50 points even amid the Middle East war."
Stagflation (a recession amid high inflation) fears highlighted by the Iran situation could be affected by the employment figures. For March, new jobs are expected to increase by 51,000 from the previous month (which fell by 92,000), according to market forecasts.
Meanwhile, in April, Korea's Treasury bonds will be added to the World Government Bond Index (WGBI). Lee Kyung-min, a Daishin Securities researcher, said, "As the index is gradually reflected through November, mechanical inflows of passive funds are expected," and added, "If export-import data confirm robust economic fundamentals centered on semiconductors, Treasury yields and the won-dollar exchange rate could fall."
Experts advised that in this environment, it is worth prioritizing investments in sectors that benefit from high oil prices and high interest rates, such as energy, construction, power, trading companies, defense, banks and insurance. They particularly stressed that buying in tranches is important. Kim Min-gyu, a KB Securities researcher, said, "We recommend a strategy of buying whenever the index undergoes a correction," and added, "For semiconductors, the best time is when oil prices are low and stable, but once oil's rise calms, underperformance also eases."
Lee Kyung-min said, "When the rise in the won-dollar exchange rate slows, there is a high likelihood that foreign passive funds will come in," and added, "A strategy of increasing weights in large-cap and leading stocks—such as semiconductors, automobiles, securities, holding companies, defense and secondary batteries—is favorable."