Market watchers see room for further gains on Q2 earnings and policy tailwinds

An electronic board at a Hana Bank trading room in central Seoul shows the Kospi trading up 1.76 percent at 3,125.71 on Tuesday morning. (Yonhap)
An electronic board at a Hana Bank trading room in central Seoul shows the Kospi trading up 1.76 percent at 3,125.71 on Tuesday morning. (Yonhap)

South Korea’s Kospi climbed to a fresh annual high Tuesday, buoyed by overnight gains on Wall Street and optimism over easing global trade tensions.

The benchmark index opened 0.58 percent higher at 3,089.64 and briefly surpassed the 3,130 mark around 9:35 a.m. It extended gains to reach 3,133.52 by 10:20 a.m., up 2 percent and exceeding its previous peak of 3,129.09 set last Wednesday — the highest level in nearly four years.

Buying momentum was strong Tuesday morning, with the index hovering around 3,130. However, the rally lost steam in the afternoon, with the Kospi eventually closing at 3,089.65.

Foreigners returned to net buying on Tuesday after four straight sessions of heavy selling, during which they offloaded 2.2 trillion won ($1.6 billion) in Kospi shares. By market close, they had net purchased 176 billion won, with their buying fluctuating notably throughout the session. Foreigners trailed institutional investors, who led the rally with a net purchase of 474.5 billion won. Retail investors turned net sellers, unloading about 633 billion won to lock in gains.

The Kosdaq also posted modest gains, opening 0.42 percent higher at 784.8 and climbing to an intraday peak of 788.38. Institutions were net buyers, while retail and foreign investors trimmed their positions.

Equities drew support from a strong overnight performance in US markets, where the S&P 500 closed at a record 6,207.95 and the tech-focused Nasdaq hit 20,369.73.

Analysts attributed Wall Street’s gains to optimism ahead of second-quarter earnings and easing trade tensions, including Canada’s withdrawal of a planned digital tax and a 2 percent jump in Apple shares on AI momentum.

Investor sentiment in Seoul was further lifted by robust export figures and rising expectations for market-friendly regulatory reforms.

“Korea’s exports rose 4.3 percent on-year in June, with semiconductors hitting an all-time high and autos marking their strongest June on record,” said Lee Jae-won, a strategist at Shinhan Securities.

“On top, a proposed amendment to the Commercial Act is being tabled at the Legislation and Judiciary Committee today, and opposition parties that once opposed it are shifting stances, raising expectations for its passage this week.”

The ruling Democratic Party of Korea is pushing to revise the Commercial Act to improve corporate governance and bolster minority shareholder rights, aiming to pass the bill before the June provisional legislative session ends this week.

Han Ji-young, an analyst at Kiwoom Securities, said it is too soon to call an end to the market’s upward momentum.

“There are still several potential upside catalysts this month, including the impact of Trump’s universal tariffs, the second-quarter earnings and the details of the Commercial Act amendment,” he said. “The recent pullback in Korean equities should be seen as a period of consolidation (not a trend reversal).”


jwc@heraldcorp.com