[R&E] Tech Stock Rally, Domestic Market Attempts to Recover Losses... Securing Semiconductor Earnings Traction Amid Geopolitical Risks

[R&E: Research & Epoch]

This is News Epoch's signature report that provides a perspective on the new era of investment by comprehensively analyzing global financial data and domestic brokerage research.

Global Market Brief

The previous day, the New York stock market rebounded across the board, with the Dow recording +2.49%, the S&P 500 +2.91%, and the Nasdaq +3.83%. In particular, the S&P 500 index recorded its highest daily return since May. This is the result of the Conference Board's Consumer Confidence Index for March exceeding market expectations at 91.8, and the Job Openings and Labor Turnover Survey (JOLTS) for February showing a cooling down of the overheated labor market with 6.882 million job openings. Accordingly, expectations of an interest rate cut by the Federal Reserve (Fed) spread through Wall Street again, strengthening the preference for risk assets. The Volatility Index (VIX) plummeted by 17.5% from the previous day to 25.3p.

On the other hand, geopolitical risks continue to act as a key variable in the market. Following the US-Iran war, international oil prices have nearly doubled, and the previous day, oil prices exceeded $105 during intraday trading. The news of Iran's strike on aluminum production facilities in Bahrain and the UAE drove aluminum prices to their highest level since 2022. This proves that the Middle East conflict is causing severe disruptions to the supply chain of energy and key raw materials. As this exacerbates inflation pressure and increases the burden of corporate production costs, it is expected to impact raw material-related sectors in the short term, and overall economic uncertainty in the long term.

Domestic Market Overview

On the previous trading day, the domestic stock market recorded a significant decline due to heightened geopolitical risks and the rapid depreciation of the won. The KOSPI fell 4.26% to 5,052.46pt, and the KOSDAQ plummeted 4.94% to 1,052.39pt. In particular, the won-dollar exchange rate exceeded 1,536 won during intraday trading and closed at 1,525.2 won (+7.0 won). This indicates that the outflow of foreign funds intensified and risk aversion in the domestic market reached its peak.

Today, the domestic stock market is set to seek a rebound, supported by the strong rally in the New York stock market and the downward trend in the Non-Deliverable Forward (NDF) exchange rate. The NDF exchange rate (1-month) is expected to open at 1,505.31 won, down about 13 won from the previous day, and KOSPI night futures also rose by 6.1%. This suggests the possibility of bargain hunting inflows due to the excessive drop in the domestic stock market alongside the global tech stock rally. However, the still-high won-dollar exchange rate and geopolitical instability remain factors limiting further upside in the domestic stock market.

Key Industry Issues and Insights

Tech stocks have recently driven the US stock market. In particular, the strength of the semiconductor sector was prominent. The previous day, Intel (NASDAQ: INTC) rose by 7.14%, AMD (NASDAQ: AMD) by 3.77%, NVIDIA (NASDAQ: NVDA) by 5.62%, and TSMC (NYSE: TSM) by 6.78%. Micron (NASDAQ: MU) also rebounded by 4.98% following the shock of its plunge, pushing the Philadelphia Semiconductor Index up by 6.24%. This is interpreted as the result of recovering risk appetite in the US market and improved investor sentiment toward artificial intelligence (AI)-related tech stocks.

In the Korean market, on the previous trading day, Samsung Electronics plummeted by 6.0% and SK hynix by 8.0%, but for the first quarter, Samsung Electronics is expected to exceed market expectations by recording total corporate sales of 132.5 trillion won (+67.4% year-on-year) and an operating profit of 43.6 trillion won (operating profit margin of 32.9%). In particular, it is analyzed that a 65.0% rise in DRAM prices and a 60.0% rise in NAND prices drove the earnings of the memory division. This proves that despite short-term geopolitical risks, the solid fundamentals of the global semiconductor market and the core competitiveness of domestic companies remain valid.

In the game industry, Pearl Abyss is drawing attention. Pearl Abyss's flagship title recorded 276,000 concurrent users on Steam, breaking its previous high, and its Steam sales ranking rose to 3rd place. Meritz Securities newly assumed Pearl Abyss's second-quarter sales volume in China at 2 million copies, and revised its target price upward from 62,000 won to 100,000 won. This is the result of the successful box office performance on global platforms and the potential for expansion into the Chinese market being positively reflected in the corporate value.

The secondary battery and electric vehicle markets are showing a mixed trend. Global electric vehicle sales in February were 1.055 million units, down 13% year-on-year. In particular, sales in the US decreased by 35% and sales in China decreased by 31%, highlighting a clear slowdown in growth in major markets. On the other hand, Europe increased by 20% and South Korea by 139%, showing a contrasting picture. Battery shipments in February also declined by 5% to 61.2GWh, and the earnings of major battery companies were mixed. LG Energy Solution's shipments increased by 5%, while Samsung SDI's shipments decreased by 22% for the second consecutive month. Lithium prices rose, but prices of other key raw materials such as nickel and cobalt showed mixed trends. Hyundai Motor is continuing to invest in the transition to future vehicles, such as launching a Software Defined Vehicle (SDV) pace car in the second half of 2026.

Market Signals

• Global stock market rebound: All three major New York stock indices rose the previous day, recovering overall market sentiment.

• Domestic stock market seeks rebound after plunge: Despite the sharp decline on the previous trading day, it is highly likely to recover its losses due to the drop in the NDF exchange rate and the rise in night futures.

• Semiconductor earnings traction: Samsung Electronics' Q1 operating profit analyzed to exceed market expectations at 43.6 trillion won (estimated). DRAM/NAND price hikes lead performance.

• Geopolitical risks persist: Intraday international oil prices exceeding $105 and strong aluminum prices maintain upward pressure on raw material prices.

• Game industry IP competitiveness: Pearl Abyss's corporate value re-evaluated due to its global platform success and expectations for the Chinese market.

Epoch View: Investment Implications

The global stock market has secured rebound momentum led by US tech stocks despite the pressure of geopolitical risks. In particular, the strength of the semiconductor sector, coupled with the solid earnings outlook of major domestic companies, leads to an attempt to recover the losses in the Korean stock market. Whether the won-dollar exchange rate stabilizes is a key variable for the short-term market, but the robust semiconductor industry conditions and the momentum of new releases in the game industry are key factors enhancing the downward rigidity of the domestic stock market. The market is judged to be finding a balance between geopolitical uncertainty and intrinsic corporate value.

This content was generated by News Epoch's proprietary AI algorithm, which analyzes public data from major domestic securities firm research centers and global financial media in real-time. We state that this is an objective summary based on collected data and is not an investment solicitation or recommendation for specific stocks.