The KOSPI index, which returned after the May golden holiday, closed the week at 2577.27. This figure shows a slight increase compared to just before the holiday (closing price on May 2 was 2559.79). Reports indicate that news of trade negotiations between the United States and China in Switzerland positively impacted investor sentiment. While the outcome of the negotiations cannot be regarded with optimism, the mere fact that both sides are sitting at the table is seen as a favorable sign for the market. However, the Korean stock market took a breather after three consecutive trading days of gains from the 2nd to the 8th before the weekend on the 9th.
This week (May 12–16), U.S.-originating tariff policies are expected to dictate the flow of the Korean stock market. As seen in the success of the U.S.-China trade negotiations, expectations that the tariff risks have passed their peak are spreading in the market. Bloomberg reported that the administration of Donald Trump is pursuing a plan to lower tariffs on China to below 60% to ease tensions and mitigate economic damage.
iM Securities found evidence of the easing of reciprocal tariff risks in the recent sharp rebound of Bitcoin prices. Last month, Bitcoin prices temporarily plummeted to around $74,000, but have currently recovered to the $100,000 range. The breach of $100,000 for Bitcoin is the first time in three months since February 2. Park Sang-hyun, a researcher at iM Securities, noted, "The price of Bitcoin has shown a high correlation with technology stocks," and added, "If the trend of Bitcoin prices continues amid the easing of reciprocal tariff uncertainties, there is a high possibility that the rebound in technology stocks will also follow."
This week, the U.S. consumer price index (CPI) for April and retail sales will be announced. However, experts believe that the impact on the stock market will be limited as the figures will not fully reflect the effects of tariffs.
NH Investment & Securities anticipates that the supplementary budget policy may affect the market this week. Previously, the National Assembly passed the "2025 First Supplementary Budget" of 13.8 trillion won during a plenary session on the 1st of this month. On the 7th, the government designated 12 trillion won of the 13.8 trillion won for swift execution management, stating that it would execute 70% of the overall supplementary budget within three months. The 12 trillion won includes support measures for small businesses (1.6 trillion won), revitalization of local economies (1.4 trillion won), and artificial intelligence (AI) innovation (1.8 trillion won).
Na Jeong-hwan, a researcher at NH Investment & Securities, stated, "We maintain a positive outlook for the retail and food sectors due to expectations for domestic economic recovery."
It is advised to pay attention to Microsoft's announcement that it will incorporate Google's Agent-to-Agent (A2A) protocol into its AI development platform. A2A is an open protocol that allows standardized communication between AI agents. The researcher noted, "The efficiency of AI-utilizing software corporations could significantly improve, which is why attention should also be given to the AI software sector."
The potential escalation of military conflict between India and Pakistan due to long-standing religious tensions poses a risk to the market. On the 22nd of last month, a terrorist attack by a Muslim armed group in the Indian-administered Kashmir region resulted in a number of Hindu tourists' deaths. In response, Indian forces carried out airstrikes on areas believed to be the strongholds of the armed group, and Pakistan retaliated, escalating the situation.
Jeon Byeong-ha, a researcher at NH Investment & Securities, stated, "The strengthening of Hindu nationalism under Prime Minister Modi in India and the increasing influence of the military in Pakistan not only impact the future developments of this conflict but also raise the likelihood of further clashes in the medium term." He mentioned that even if mediation occurs, the fundamental issues surrounding religion and borders in the Kashmir region are unlikely to be resolved, making the possibility of recurrence high.