[R&E] KOSPI Surges 3.55% to Hit Record High, Led by Samsung Electronics Amid Rising Exchange Rate Volatility

[R&E: Research & Epoch] This is News Epoch's signature report that envisions a new era of investment through an integrated analysis of global financial data and domestic brokerage research.

Global Market Brief

Last Friday (05/29), the New York stock market recorded a moderate upward trend. The Dow Jones Industrial Average rose 0.72% to 51,032.46p, while the S&P 500 and Nasdaq indices also increased by 0.22% and 0.20%, respectively. Conversely, the Russell 2000 Index fell 0.59%, reflecting the sluggishness of small and mid-cap stocks, and the Philadelphia Semiconductor Index remained flat. This suggests that a differentiated market driven by big tech continues.

U.S. Treasury yields showed a downward trend. The 2-year yield fell 1.6bp to 4.004%, and the 10-year yield dropped 1.2bp to 4.436%. This indicates that despite concerns over inflation re-accelerating, fears of a U.S. GDP slowdown coexisted, with safe-haven preference playing a partial role. International oil prices fell. West Texas Intermediate (WTI) crude dropped 1.7% from the previous day to $87.4, and Brent crude also fell by 2%. The fact that prices declined even though oil production disruptions have continued for a third month following the outbreak of war in the Middle East indicates a potential slowdown in global demand. The dollar index remained flat at 98.9pt, but the exchange rates of some emerging countries, such as the offshore Chinese yuan and the Brazilian real, showed strength. In contrast, the won/dollar exchange rate rose by 11.0 won from the previous day to 1,504.5 won last Friday, revealing that the strong dollar pressure continues to affect the domestic market.

Meanwhile, China's National Bureau of Statistics reported a manufacturing PMI of 50.0 for May, down 0.3 from the previous month, indicating a slight slowdown in the manufacturing sector. This acts as a factor increasing uncertainty about the global economic recovery.

Domestic Market Overview

On the previous trading day (Friday, 05/29), the domestic stock market exhibited stark polarization. The KOSPI rose 3.55% to 8,476.15pt, surging over 28% in May alone to hit an all-time high closing price. This proves that the concentration of funds into specific large-cap stocks and sectors has intensified. On the other hand, the KOSDAQ fell 2.68% to 1,074.8pt, continuing its downward trend for three consecutive trading days. The sluggish performance of the KOSDAQ market reveals that it is undergoing a significant correction from its peak (1,229.42p in April).

In terms of supply and demand, foreign selling continued. Foreigners recorded net selling on the KOSPI for 16 consecutive trading days up to last Friday, selling off the electrical and electronics, finance, and transportation and storage sectors. Conversely, they net-bought the transportation equipment, chemicals, machinery, distribution, and securities sectors. Institutions supported the market by heavily purchasing the electrical and electronics, transportation equipment, and finance sectors.

The exchange rate is a major variable in the domestic market. The won/dollar exchange rate stood at 1,504.5 won, up 11.0 won from last Friday, and the 1-month NDF exchange rate rose 11.5 won to 1,506.6 won. This shows that exchange rate volatility is expanding due to a combination of global interest rates and geopolitical risks.

A positive signal is the National Pension Service's move to raise its domestic stock holding limit. The National Pension Service increased its domestic stock holding limit from 14.9% to 20.8% and its strategic asset allocation tolerance range from 3%p to 6%p. This means it can expand its domestic stock investments up to 28.8%, which is analyzed to have a positive impact on the long-term improvement of supply and demand conditions in the domestic stock market.

Key Industry Issues and Insights

Semiconductors: NAND Price Increases and Expectations for AI Infrastructure Investment

The domestic semiconductor industry continued its strong performance, driving the KOSPI to hit a record high. On the previous trading day, Samsung Electronics (KOSPI: 005930) led the market with a 5.84% increase. This proves the strength of large-cap semiconductor stocks, with the market capitalization gap with SK Hynix (KOSPI: 000660) recording 11.5%. In particular, since the launch of the single-stock leverage ETF, trading volume worth 28 trillion won occurred over three days, revealing that retail investors' funds are concentrating on large-cap semiconductor stocks. Semiconductor exports in early May increased significantly compared to the previous year, and although manufacturing production in April decreased by 0.8% from the previous month, semiconductor production showed a solid trend, rising 9.0% month-on-month and 13.0% year-on-year.

The recovery of the NAND flash market is also noteworthy. In May, SLC product prices rose by 3% to 16% month-on-month, and MLC product prices also increased by about 10%. The fact that the cumulative price increase since the first quarter of 2025 has reached approximately 280% suggests a structural improvement in the memory semiconductor industry conditions. In the global market, data center-related companies showed strength, with Dell rising 32.8%. On the other hand, Nvidia and Intel experienced pullbacks, showing that investor sentiment is differentiated even within the AI-related hardware market. The announcement by SoftBank to invest 132 trillion won in France to build a 5GW AI data center infrastructure raises expectations for future increases in AI semiconductor demand. Such trends are judged to have a positive impact on improving the earnings of domestic semiconductor companies providing high-performance memory and AI-related solutions.

Electric Vehicles and Batteries: European Market Success and Challenges for Domestic Companies

The global electric vehicle market showed different growth trends by region. Total EV sales reached 1.716 million units, up 10% year-on-year, but the U.S. market declined 35% to 86,000 units, and the Chinese market remained flat at 989,000 units. Conversely, the European market increased 27% to 403,000 units, and the South Korean market showed solid growth, increasing 123% to 40,000 units. In particular, Europe's EV sales in April rose 32% year-on-year to 374,000 units, and pure electric vehicle sales grew 38% to 255,000 units. This suggests that eco-friendly policies and infrastructure expansion in Europe drove the sales increase. However, on a cumulative basis up to April, European EV sales by Chinese companies such as Geely, SAIC, and BYD reached 478,000 units, accounting for 10% of total European automobile sales, revealing that China's market penetration is proceeding rapidly.

Amid these market trends, global battery shipments in April increased by 24% year-on-year to 105.7GWh, and European EV battery shipments rose 33% to 22.1GWh. This is a positive signal for battery cell and materials companies. However, domestic equipment company Hana Technology (KOSDAQ: 299030) reported first-quarter sales of 8.3 billion won, a 42.4% decrease year-on-year, and continued its deficit by recording an operating loss of 3.7 billion won. This resulted in an expanded loss despite exceeding market expectations for sales (expected sales of 6.9 billion won, expected operating profit of 2.8 billion won). A high cost of sales ratio (up 24.4% year-on-year) and a selling, general and administrative expense ratio (up 9.1% year-on-year) are analyzed as the main causes of profitability deterioration. Furthermore, Solus Advanced Materials lost the first trial of a patent lawsuit against SK Nexilis, and additional lawsuits are underway in Europe and South Korea. This implies that battery materials companies must be cautious in managing patent risks amid intensifying technological competition.

Defense and Nuclear Power: Formalization of Nuclear-Powered Submarine Development and Expansion of Security Cooperation

The South Korean government announced on the 26th that it named the nuclear-powered submarine project the 'Jang Bogo-N Project' and plans to promote it as a core national-level force acquisition project. The Ministry of National Defense unveiled the 'Republic of Korea Nuclear-Powered Submarine Development Basic Plan,' promising to adhere to five development principles and three nuclear non-proliferation obligations. This reveals a determination to strengthen independent defense capabilities in response to changes in the security environment. According to media reports, the displacement of the Korean-type nuclear-powered submarine has been upgraded from the existing 5,000-ton class to the 8,000-ton class, with the goal of launching the first of about 3 to 4 vessels in the mid-2030s. Considering that the procurement cost of France's Barracuda-class nuclear-powered submarine (5,300-ton class) is approximately 2 trillion won per vessel, massive defense budget injections are expected.

Notably, the U.S. State Department expressed its support for South Korea's nuclear-powered submarine development on the 29th, stating, "The United States is supporting South Korea's conventionally armed nuclear-powered submarine program, and nuclear cooperation between the two countries will be pursued in a manner consistent with international non-proliferation standards." This is interpreted as leaving open the possibility of concluding a 'Special Arrangement' under Article 14 of the IAEA Comprehensive Safeguards Agreement to operate military nuclear-powered reactors, even though South Korea is a non-nuclear weapon state party to the NPT. The fact that an inaugural meeting to consult on follow-up measures in the security field of the ROK-U.S. Summit Joint Fact Sheet is scheduled to be held in Seoul from June 2 to 3 also suggests the deepening of this security cooperation. While this project is expected to contribute to the advancement of domestic defense industry technology, compliance with the Nuclear Non-Proliferation Treaty and transparent communication with the international community remain core challenges.

Biotech: Spotlight on Individual Pipeline Competitiveness Amid Sluggish Industry Conditions

Entering 2026, the pharmaceutical/biotech industry showed the most sluggish trend in returns among all sectors compared to the beginning of the year. In the first half of 2026, technology transfer performance by domestic listed biotechs has been non-existent, with the exception of Alteogen. This reveals a contraction in overall market investor sentiment. However, the pipeline competitiveness of individual companies remains valid. HanAll Biopharma's IMVT-1402 aims to be the first to enter markets without treatment options, such as GD and D2T RA. In particular, it is demonstrating differentiated efficacy by showing the deepest IgG reduction among FcRn inhibitors.

AprilBio also announced positive clinical results. According to the Phase 2a clinical results for APB-R3 in atopic dermatitis (announced in February 2026) with partner Evommune, it showed a similar level of EASI score improvement in a shorter period with fewer administrations and doses compared to existing treatments on the market, while also demonstrating excellent safety. Furthermore, in the Phase 1b clinical trial of APB-A1 for thyroid eye disease, it released data showing that six patients who completed the initial administration simultaneously achieved relief from eye protrusion symptoms and a reduction in autoantibodies targeting thyroid hormone receptors. These results indicate that the innovativeness and clinical significance of individual pipelines are key factors determining investment value within the biotech industry. Despite the overall sluggish industry conditions, companies with differentiated technological capabilities are judged likely to secure growth momentum.

Market Signals

• Domestic Stock Market Liquidity: Customer deposits in the domestic stock market continue to break record highs.

• Carbon Emission Allowance Prices: The price per ton of carbon emission allowances surpassed 20,000 won for the first time in three and a half years.

• K-Beauty and K-Food Exports: In April, cosmetics exports reached $1.12 billion, up 31% year-on-year, and instant noodle (ramen) exports rose 35% to $180 million.

• KOSPI Market Breadth: The KOSPI Advance/Decline Ratio (ADR) stood at 51%, marking its lowest level since March 2020.

• Stabilization of Korea Treasury Bond Yields: The 3-year Korea Treasury Bond yield fell 2.9bp to 3.738%, and the 10-year yield dropped 7.1bp to 4.074% (as of 5/29 close). The size of the competitive bidding for Korea Treasury Bonds in June is 15 trillion won, a decrease of 4 trillion won from the previous month.

• Equity ETF Market: The market capitalization of equity ETFs, excluding inverse/leverage products, amounts to 350 trillion won.

Epoch View: Investment Implications

While the KOSPI hit a record high last Friday, the continued net selling by foreigners and the decline in the KOSDAQ simultaneously reveal strong differentiation and instability within the market. The concentration of supply and demand into large-cap semiconductor stocks reflects expectations for AI infrastructure expansion, but this could become a factor that weakens the overall market strength. The upward trend of the dollar-won exchange rate indicates global macroeconomic uncertainty and the domestic market's external vulnerability, and it is judged likely to act as a persistent burden on investor sentiment. The expansion of the National Pension Service's domestic stock investment limit is positive for the improvement of medium- to long-term market liquidity, but in the short term, it is a time that requires a cool-headed response to concerns over global economic slowdown and exchange rate volatility.

This content was generated by News Epoch's proprietary AI algorithm, which tracks and analyzes public data from major domestic brokerage research centers and global financial media in real time. We clarify that this is an objective summary based on collected data and does not constitute a solicitation or recommendation to invest in specific stocks.