Securities experts are projecting that this week's market will seek a new direction as earnings expectations and stock price burdens collide. NH Investment & Securities analyzed that the KOSPI index is likely to fluctuate between 5,800 and 6,700 over the week from the 27th to the 30th. Researcher Na Jeong-hwan emphasized that market leadership will ultimately be decided by corporate earnings, pointing out that trends cannot be easily predicted based solely on supply and demand or policy expectations.
Looking at the current valuation levels of the domestic market, the price-to-earnings ratio relative to earnings and the price-to-book ratio relative to assets are sending contradictory signals. The 12-month forward P/E ratio is at 8.5x, which is below historical averages and suggests a relatively undervalued zone; however, the trailing P/B ratio is at 1.99x, which is near historical highs. Researcher Na explained that a low P/E ratio relative to earnings indicates that future earnings surges have already been reflected in stock prices, while a high P/B ratio relative to assets is the result of simultaneous effects from improved return on capital centered on semiconductors and power infrastructure, along with expectations for value-up policies. He stated that rather than simply defining the market as overvalued or undervalued, it is a complex zone where it is cheap relative to earnings but expensive relative to capital.
From an investment strategy perspective, advice has been issued to construct portfolios centered on industries with verified earnings. Researcher Na stated that while maintaining core leadership stocks in semiconductors, power equipment, nuclear power, and defense—sectors with proven results—a selective strategy is needed to include stocks showing improved earnings within industries where the year-over-year improvement in return on capital is significant. In particular, this week's earnings reports from major U.S. large-cap technology companies could play a crucial variable in the domestic market, requiring special attention. Earnings reports from major big tech companies such as Google, Meta, Microsoft, and Amazon are key indicators showing the direction of AI investment, which is expected to have a spillover effect on the entire related value chain, including semiconductors, power equipment, and energy.
In addition, the earnings announcement schedules of major domestic companies are attracting market attention. On the 28th, Samsung SDI, Hyundai Engineering, HD Hyundai Electric, and on the 29th, Samsung Electro-Mechanics, LG Energy Solution, and Hanwha Aerospace will make their year-end announcements ahead. Researcher Kang Jin-hyeok of Shinhan Investment & Securities predicted that this week's earnings announcements could help determine whether the strong trends in the shipbuilding, defense, and power equipment industries will continue. He emphasized that it is crucial to verify whether the expectations already reflected in stock prices for battery companies, where earnings turnarounds are expected, are supported by actual results.
Finally, the interest rate policy and re-election issues of the U.S. Federal Reserve have emerged as important factors that could affect market volatility. The wording of the statement released at the Federal Open Market Committee meeting and Chair Jerome Powell's remarks on oil prices have become the market's top concerns. Consensus forecasts reflect a high likelihood of interest rate freezes. Researcher Na pointed out that since the West Texas Intermediate crude oil price is at a high level compared to the previous year, how the Federal Reserve expresses the inflation risk caused by rising oil prices is the key. He noted that if international oil prices stabilize, the possibility of resuming interest rate cuts in the second half of the year is open, which could have a positive impact on the stock market. While Chair Powell's term expires on May 15, he will continue to perform his current role until a successor is approved, and the outcome of Senate votes on whether to investigate the department of justice is expected to be a variable.