The stock market is changing moment by moment due to the emergence of unexpected variables, but forecasts are still necessary. This is not about predicting how much the Korea Composite Stock Price Index (KOSPI) will rise in the second half of the year. There is nothing as meaningless as trying to hit the right numbers. It is about examining the current market atmosphere, what events are scheduled in the future, and what flow is likely to be created as these factors come together.
Let’s start with the macro aspects. Concerns about tariff-induced stagflation (economic stagnation accompanied by rising prices) are likely to diminish as the possibility of President Donald Trump's high reciprocal tariffs being lowered through negotiations has increased. Park Sang-hyun, a researcher at iM Securities, noted, “The levels at which tariff rates between the U.S. and major countries will be determined and whether the tariff negotiations between the U.S. and China will be resolved smoothly are critical variables that will influence the global economic flow in the second half.”
Researcher Park expects that the growth rate in the second half of the year will be better than in the first half. This is due to expectations that the newly launched government’s stimulus measures will support the economy alongside the easing of tariff uncertainties. Additionally, he anticipated a gradual decline in the exchange rate of the won against the U.S. dollar.
What will the stock market look like under these conditions? NH Investment & Securities views the second half of the year as a period when reading 'the wind' will become more important than 'the map.' This means that policy direction and the resulting psychological reactions will have a greater impact on the market than economic fundamentals.
Kim Byung-yeon, a researcher at NH Investment & Securities, said, “There is a high possibility that growth industries centered on domestic demand will emerge in light of the new government's domestic stimulus measures and expectations for restoring trust in the capital market” and added, “The strategy for the second half will likely be the ‘Double Edge’ strategy, which incorporates high price-to-earnings ratio (PER) artificial intelligence (AI) growth stocks and low price-to-book ratio (PBR) value stocks, moving away from the first half’s focus on shipbuilding and defense.”
Korea Investment & Securities recommended focusing on industries that can generate revenue above expenses. Kim Dae-jun, a researcher at Korea Investment & Securities, stated, “Industries like defense, shipbuilding, and utilities, which have valid growth stories, are not at the stage of considering a reduction in weight despite weakened upward momentum,” and emphasized, “It is necessary to pay attention to software, cosmetics, holding companies, and construction, which are expected to improve return on equity (ROE) in light of domestic and international stimulus expectations and interest rate cuts.”