Experts expect volatility in the Korean stock market to persist this week as the possibility of a military conflict between the United States and Iran intensifies, sending international oil prices surging and spreading risk-averse sentiment.
According to the Korea Exchange (KRX), the KOSPI index closed at 5,438.87 on the 27th, down 21.59 points (0.40%) from the previous trading day. Concerns over the prolonged Middle East war, which has weighed on the domestic market, combined with worries about Google's "TurboQuant," pushed the index as low as the 5,200 level during the session. However, the index trimmed its losses as fears over TurboQuant eased somewhat.
The biggest variable weighing on global markets, including Korea's, is the Middle East war. Tensions appeared to ease after U.S. President Donald Trump said he would grant another extension on the deadline for striking Iranian power plants. However, reports that thousands of U.S. troops, including elite soldiers from the 82nd Airborne Division, are being deployed to the Middle East have driven tensions back toward a peak.
The prolonged war has led to a surge in international oil prices, adding to foreign investors' uncertainty about Korea. Foreign investors have launched large-scale selling on the stock market, judging that Korea is vulnerable to oil price volatility due to its heavy dependence on crude oil imports.
Foreign investors have sold a total of 30.3827 trillion won ($22.4 billion) this month alone, and net selling since February has reached 51.4557 trillion won ($37.9 billion). In particular, foreign selling has been concentrated on large-cap semiconductor stocks that had been driving the domestic market, amplifying volatility.
Samsung Electronics' (005930.KS) foreign ownership ratio stood at 48.90% as of the 26th, the lowest since October 1, 2013 (48.87%) — a span of approximately 12 years and six months. This is why forecasts suggest that foreign investors' dumping of shares will continue for the time being as long as high oil prices and a weak won driven by the Middle East war persist.
Market participants expect the direction of the stock market to be determined by U.S. economic data in addition to developments in the Middle East war. Depending on progress in negotiations, risk appetite could recover quickly, but if a military conflict materializes, additional downward pressure cannot be ruled out.
Among economic indicators, the March employment report due on the 3rd of next month is considered a key data point. The focus will be on whether U.S. nonfarm payrolls rebounded after the employment shock in February, when payrolls plunged by 92,000 from the previous month due to strikes and a cold snap. The market estimates that March payrolls increased by 48,000.
Starting with the February Job Openings and Labor Turnover Survey (JOLTS) report to be released on the 31st, the ADP private employment data and February retail sales on April 1, and the ISM Manufacturing Purchasing Managers' Index (PMI) on April 2 are also worth watching. Investors are expected to use these data points to comprehensively assess the state of the U.S. labor market, consumer spending, and manufacturing activity.
Some analysts also note that Samsung Electronics' first-quarter earnings release scheduled for early April could shift the market's attention from macro variables such as war back to corporate fundamentals. They say tactical positioning is needed, centered on semiconductors, which are currently the market's leading stocks.
"The current phase in the domestic market is a decline driven by excessive psychological fear rather than fundamental deterioration, and if the two countries enter a ceasefire phase, the uncertainty weighing on the global macro environment will lift and financial market volatility will also ease," said Kim Jong-min, a senior analyst at Samsung Securities (016360.KS). "If we look past the noise from external variables and examine the internal trajectory of the Korean market, signals of a rebound can be detected."
Lee Jae-man, an analyst at Hana Securities, said, "Under the semiconductor big cycle, stock price peaks tend to form around the same time as operating margin peaks. Considering that the operating margin peaks for Samsung Electronics and SK hynix (000660.KS) are expected in the first half of 2027, investors should take advantage of the current situation as a buying opportunity at lower prices." He added, "In past long-term index uptrends driven by corporate earnings growth, the KOSPI has experienced monthly declines of up to negative 12 percent (average negative 5 percent), and the typical correction period in such phases is one month, with a maximum of three months."
