Kospi rising for 5 consecutive weeks due to Us-China negotiation breeze, ‘Sell America’ recurrence concerns
The domestic stock market rose for five consecutive weeks, receiving positive signals from the high-level tariff negotiations between the US and China. The KOSPI recorded a 1.92% increase last week to 2,626.87, maintaining its upward trend for the fifth consecutive week. While the news that NVIDIA would supply AI chips on a large scale to Saudi Arabia during Donald Trump's tour of the Middle East led to a strong semiconductor sector, increased exchange rate volatility limited the market's rise.
The China-US negotiations unfolded more positively than expected, with news that both countries would significantly reduce tariffs for 90 days, which positively affected the market. With the news of NVIDIA's large-scale supply, SK Hynix recovered to the 200,000 won level, and Samsung Electronics exceeded the 57,000 won level, leading the weekly rise in semiconductors.
Foreign investors net purchased 1.764 trillion won in the KOSPI market, showing a buying trend for three consecutive weeks. Institutions also net purchased 533.7 billion won, supporting the market. On the other hand, individual investors net sold 1.7654 trillion won, realizing profits.
By industry, transport and warehouse (12.41%), machinery and equipment (10.34%), and securities (5.91%) were strong due to expectations of global trade recovery. Conversely, the pharmaceutical (-2.33%), non-metal (-2.41%), and metal (-1.61%) sectors showed weakness due to the sharp decline of UnitedHealth stock in the US. The KOSDAQ index also rose 0.35% to 725.07, marking an increase for the second week in a row.
As the KOSPI enters an overbought territory following a five-week rise, short-term fluctuations are expected. In particular, Moody's downgrade of the US credit rating from ‘Aaa’ to ‘Aa1’ is pointed out as a factor that can create anxiety in the global financial market.
Furthermore, the possibility of won appreciation has been raised following the Korea-US currency consultation, increasing concerns about the weakening of export competitiveness. As a result, there is also a warning that the domestic stock market may turn into a Sell America movement.
Seo Sang-young, a researcher at Mirae Asset Securities, analyzed, "The downgraded credit rating was already anticipated, so its impact on the stock market may be limited, but increased volatility due to profit-taking sales is inevitable."
NH Investment & Securities presented this week's KOSPI forecast at 2,550∼2,690, projecting that progress in US-China negotiations and the AI investment expansion trend from the Middle East would be major variables.
At Computex 2025, held in Taiwan from the 20th to the 23rd, NVIDIA CEO Jensen Huang might announce new AI technologies, which could act as a further driving force for the rise in semiconductors, according to analyses.
This week's key economic indicators include China's April retail sales and industrial production (19th), Eurozone consumer price index (CPI, 19th), US S&P Global PMI (22nd), and Japan's April CPI (23rd).
Experts expect that although the easing of uncertainty in US-China negotiations will act as a short-term boost, the market's volatility is likely to increase as the breather stage due to the overbuying aligns with global economic uncertainty.