[R&E] KOSPI Drops 5.12% While KOSDAQ Rises 2.44%, Strong Q2 Earnings from Hanwha Aerospace and Daeduck Electronics Provide Downward Support

[R&E: Research & Epoch] This is News Epoch's signature report that provides a perspective on a new era of investment by integrating and analyzing global financial data and domestic securities firm research.

Bull Market Brief

The U.S. New York stock market rose across the board, driven by strong expansion signals in manufacturing economic indicators and an easing of geopolitical tensions. At the previous close, the blue-chip Dow Jones Industrial Average rose +1.32% from the previous trading day to record 53,178.41 points, breaking its all-time high. The large-cap S&P 500 Index closed at 7,600.50 points, up +1.48%, and the tech-heavy NASDAQ Composite Index ended the session at 25,913.90 points, up +2.13%. The U.S. July ISM Manufacturing Index recorded 55.6, exceeding the market expectation of 54.0 and showing expansion at its highest level in about four years, which stimulated investor sentiment. This is the result of reaffirming the economic expansion trend as the employment index also shifted to an expansionary phase while manufacturing production and new orders maintained a solid flow.

The foreign exchange and commodity markets also reacted sensitively to macroeconomic variables. As U.S. President Donald Trump announced plans to withhold military attacks on Iran, international oil prices plummeted. On the New York Mercantile Exchange, West Texas Intermediate (WTI) crude oil futures prices plunged -5.11% from the previous day to $80.34 per barrel, and Brent crude oil also closed at $83.77, down -4.73%. With inflation concerns easing due to the plunge in oil prices, the U.S. 10-year Treasury yield fell by -5.9 bps to 4.6755%. In the New York foreign exchange market, the dollar index remained flat at around 99.9 points, but the yen/dollar exchange rate underwent a downward adjustment to 157.18 yen as the influence of joint intervention by U.S. and Japanese foreign exchange authorities continued.

Amid a tech-driven rally, Amazon rose +4.58%, surpassing a market capitalization of $3 trillion for the first time in history. This was the result of the strong profit-generating capability of its cloud service being highlighted as confidence in the AI profitability of Amazon's AWS division was confirmed. Microsoft also continued its strong performance, rising +4.93%. In contrast, Apple fell -1.78% over concerns of limited sales growth caused by supply chain instability related to chips.

Domestic Market Overview

In the domestic financial market, the two major indices displayed a clearly differentiated market as the global manufacturing economic improvement trend coincided with the desire for short-term profit-taking following the previous day's surge. The KOSPI index closed at 6,257.45 points, down -5.12% from the previous day. Amid the fatigue from the historic surge (+17.91%) recorded on the previous trading day, foreign and institutional investors turned to simultaneous net selling, leading the index decline.

On the other hand, the KOSDAQ index closed at 737.35 points, up +2.44% from the previous day, as supply and demand departing from semiconductors circulated into the pharmaceutical, biotech, and robot sectors, supporting the downside. As institutional buying flowed in rapidly during the session, a buy sidecar was triggered, temporarily suspending the validity of program buy quotes. In the Seoul foreign exchange market, the dollar-won exchange rate closed at 1,429.0 won, down 10.3 won from the previous day, linked to the drop in U.S. Treasury yields and caution over coordinated intervention by the foreign exchange authorities of Korea, the U.S., and Japan. The 1-month NDF exchange rate also indicated a downward stabilization trend.

Today (August 4), the domestic regular market is expected to continuously receive the impact of a favorable macroeconomic environment, namely the manufacturing economic expansion and tech stock rebound in the New York stock market. This is because the upwardly revised capital expenditure (CAPEX) plans of U.S. hyperscalers are providing positive performance signals to the domestic information technology (IT) component supply chain. However, the process of digesting supply due to the previous day's rapid fluctuations and the trend of retail investors' credit offering balances are analyzed to induce an earnings-driven market differentiated by sector.

Key Industry Issues and Insights

Semiconductors and IT Components: Surge in Package Substrate Utilization Rates Driven by Artificial Intelligence (AI) Infrastructure Investment

Domestic IT component manufacturers proved with their earnings the benefits from the full-scale operation of the global AI infrastructure investment cycle. Daeduck Electronics(KOSPI: 353200) recorded consolidated sales of 401 billion won and an operating profit of 70.3 billion won in the second quarter of 2026, significantly exceeding the market consensus. Compared to the same period last year, sales increased by +63.1% and operating profit grew by +2,210.0%, marking an earnings surprise. The key driver of the performance improvement is the surging demand for Flip Chip Ball Grid Array (FC-BGA), a high value-added semiconductor package substrate. In fact, Daeduck Electronics' ABF substrate utilization rate recorded 90% as of the end of the second quarter, rising sharply by more than 15 percentage points from the previous quarter. The company is sequentially executing large-scale capital investments to maintain its market dominance, and upon completion of the expansion, its bargaining power within the global AI supply chain is expected to leap forward with the expansion of production capacity for memory package substrates and FC-BGA. Meanwhile, large-cap tech stock Samsung Electronics(KOSPI: 005930) closed down -8.8% from the previous day on the KOSPI market, and SK hynix(KOSPI: 000660) also fell -8.8%, digesting profit-taking volume from the short-term surge.

Defense and Aerospace: Hanwha Aerospace's Unrivaled Fundamental Improvement, Surpassing 1 Trillion Won in Q2 Operating Profit

Domestic defense companies recorded their highest-ever quarterly performance as they began earnest delivery of export volumes. Hanwha Aerospace(KOSPI: 012450) recorded consolidated sales of 9.2929 trillion won (+47.2% YoY) and an operating profit of 1.3655 trillion won (+58.5% YoY) in the second quarter of 2026. This is the first time since its founding that quarterly operating profit has exceeded 1 trillion won, surpassing the previous market estimate of 996.2 billion won by about 37%. The overall profitability was maximized as the delivery of large-scale overseas sales (1.2324 trillion won) in the land defense sector, such as K9 self-propelled howitzers and Chunmoo multiple rocket launchers destined for Poland, was concentrated. Currently, Hanwha Aerospace's order backlog for land defense is maintained at around 38.3 trillion won, which is expected to firmly support the downside of its long-term earnings for the next 3 to 5 years. Along with this, Nearthlab, a drone and anti-drone solution company awaiting its new listing on the KOSDAQ (scheduled for August 24), also drew attention. With the global anti-drone market projected to surge at a compound annual growth rate (CAGR) of 26.5%, it shows that the overseas expansion results of domestic technology-based defense solutions are becoming fully visible.

Materials and Refining: S-Oil and Poongsan Maximize Profits Through Product Margin Improvements

Companies that achieved margin spread improvements amid expanding volatility in global commodity prices revealed distinct performance differentiation. S-Oil (KOSPI: 010950) proved its profit-generating capability by achieving an operating profit of 965 billion won in the second quarter of 2026, meeting the consensus. The refining division's operating profit of 530 billion won and the lube base oil division's operating profit of 480 billion won formed a balanced portfolio. Strong refining margins and price ceiling compensation are expected to act favorably on profit and loss improvements. Non-ferrous metal company Poongsan (KOSPI: 103140) also achieved a consolidated operating profit of 125.2 billion won (+33.8% YoY) in the second quarter, exceeding the consensus (83 billion won) by +50.8%. This was influenced by inventory-related metal gains of more than 54 billion won generated in the headquarters and overseas copper-based businesses, driven by rising copper prices, along with the defense sector's operating profit margin recovering to the 13% level. In contrast, large-cap steel stock Hyundai Steel (KOSPI: 004020) recorded a consolidated operating profit of 57.7 billion won (-43.3% YoY) in the second quarter, unable to avoid the aftermath of deteriorating market conditions, but partially offset the fixed cost burden by recording a product sales volume of 4.42 million tons, an increase of more than 150,000 tons from the previous quarter.

Market Signals

• Expansion of U.S. Manufacturing Sentiment: The U.S. July ISM Manufacturing Index recorded 55.6, exceeding the market expectation (54.0). This marks 7 consecutive months of expansion and the highest level in about 4 years.

• Amazon Enters $3 Trillion Market Cap: Amazon's stock price rose +4.58%, joining the $3 trillion market cap club for the first time in history. This is the result of its dominant position in AI and cloud (AWS) being reflected.

• KOSDAQ Buy Sidecar Triggered: Due to a rapid influx of institutional investor supply and demand, the KOSDAQ index rebounded by +2.44%, triggering a buy sidecar.

• Downward Stabilization of Exchange Rates in the Foreign Exchange Market: The dollar-won exchange rate closed at 1,429.0 won, down 10.3 won from the previous day, indicating that the short-term upward pressure on exchange rates has abated.

Epoch View: Investment Implications

The confirmation of the U.S. manufacturing economic expansion and the upward revisions of artificial intelligence (AI) capital expenditure (CAPEX) targets by large big tech companies have clearly revealed that the fundamentals of the global information technology (IT) sector have not been compromised. The previous day's decline in the KOSPI on the domestic securities market is closer to a natural process of digesting supply following a rapid surge. In particular, the earnings improvement trend of export-led companies that demonstrate their profit potential in numbers, such as Daeduck Electronics and Hanwha Aerospace, can operate as a strong defense mechanism to offset the uncertainty of the macroeconomic environment. In the second half of the year, market leadership is judged to be compressed around core component companies in the value chain where increased utilization rates and order backlogs are clearly verified, rather than just simple sentiment improvement.

This content was generated through News Epoch's proprietary AI algorithm, which tracks and analyzes public data from research centers of major domestic securities firms and global financial media in real time. It is an objective summary based on the collected data, and we clarify that it is not an investment solicitation or recommendation for specific stocks.