[R&E] KOSPI and KOSDAQ Rise Together, Relief Rally Driven by Strong Earnings from Kumho Petrochemical and CS Wind

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

Global Market Brief

The New York stock market closed lower across the board yesterday due to inflation pressure from rising interest rates and surging international oil prices. The S&P 500 Index fell 0.06% from the previous trading day to 7,753.11 points, and the tech-heavy NASDAQ Composite Index also closed 0.32% lower at 26,605.36 points. The blue-chip Dow Jones Industrial Average recorded a 0.11% decline to 53,975.98 points.

The upward trend in market interest rates stimulated profit-taking, particularly in tech stocks. The 10-year U.S. Treasury yield rose by 6.1 basis points from the previous trading day to 4.707%, crossing the 4.7% mark again, while the 2-year yield, which is sensitive to monetary policy, also closed 4.6 basis points higher at 4.241%. Uncertainty surrounding the passage of the Strait of Hormuz was highlighted by the U.S.-Iran reparations dispute and negotiation deadlock, and combined with the Houthi rebels' attack on the Saudi Aramco Jizan refinery, West Texas Intermediate (WTI) crude oil surged 5.05% from the previous trading day to close at $82.13 per barrel, amplifying cost inflation concerns. Furthermore, remarks by Fed President Hammack on the necessity of additional interest rate hikes added to bond bearishness pressure. The dollar index rose 0.27 points to 99.81 points, showing a strong dollar trend. This suggests that rising capital costs and oil price stimulation are capping the upside of the global stock market.

Domestic Market Overview

Despite increased volatility in global macro indicators, the domestic financial market rose in tandem yesterday, supported by the spread of sector rotation from large-cap semiconductor stocks to non-semiconductor stocks and the rebound of oversold stocks. The KOSPI Index recorded a 0.65% increase from the previous trading day to 6,299.66 points, and the KOSDAQ Index closed with a 6.97% surge at 854.47 points. In the KOSPI market, foreign investors recorded net selling, limiting the gains, but in the KOSDAQ market, a buying sidecar was triggered as simultaneous net buying from foreign and institutional investors flowed in. The surge in the KOSDAQ was driven by buying spreading to large-cap bio stocks, including Alteogen (+14.1%), as well as secondary batteries, defense, and automobiles.

In the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,417.5 won, up 9.7 won from the previous trading day, reflecting the strength of the dollar due to geopolitical risks. The offshore NDF 1-month exchange rate closed at the 1,417.50 won level, revealing the need for additional exchange rate volatility management. Today, the domestic regular market is expected to show a performance-differentiated market focused on sectors with clear profit growth, such as power equipment, petrochemical specialties, and K-beauty, in the process of digesting upward pressure on interest rates and oil prices originating from the U.S.

Key Industry Issues and Insights

Power Equipment & Utilities: Growth Strength Proven by Earnings from Favorable Front-line Demand
The expansion of investments in data centers and renewable energy infrastructure is leading to earnings surprises for domestic power and energy companies. Leading the medium-to-large transformer market, Sanil Electric (KOSPI: 062040) recorded second-quarter sales of 164.2 billion won and an operating profit of 62 billion won (operating profit margin of 37.8%), beating market estimates. Driven by the favorable conditions of downstream industries such as renewable energy, data centers, and ESS, sales of special transformers grew 51.7% year-on-year, leading the performance. New orders in the second quarter surged 36% quarter-on-quarter to 243.5 billion won, with orders for Bloom Energy and European Battery Energy Storage Systems (BESS) accounting for a large portion. As mass production of the 154kV ultra-high voltage transformer is scheduled to begin in 2028, mid-to-long-term growth visibility has also been secured.

Showing an increase in natural gas sales volume and favorable overseas business, Korea Gas Corporation (KOSPI: 036460) also recorded a consolidated second-quarter operating profit of 675.3 billion won, surging 66.9% year-on-year and significantly exceeding the market expectation of 430.5 billion won. While wholesale profit grew by 46.8% year-on-year, the decrease in discount costs for the socially vulnerable and the difference between the budget and settlement of reasonable costs supported the earnings. This shows that the replacement cycle of power and infrastructure is leading to actual corporate profits beyond simple expectations.

Chemicals & Materials: Mixed Fortunes Determined by Specialty Product Lines Amid Fundamental Recovery
Despite concerns over an industry slowdown, chemical companies that have successfully diversified into high-value-added products are showing off their profit strength. Kumho Petrochemical (KOSPI: 011780) recorded an operating profit of 339 billion won in the second quarter of 2026, achieving an earnings surprise with a 471.0% increase from the previous quarter (59.4 billion won). This figure is 131% higher than the market consensus of 147 billion won, thanks to improved performance across all business divisions, centered on synthetic rubber, as the surge in raw material prices such as butadiene (BD) was passed onto selling prices. However, since a significant profit decline is expected in the third quarter due to the reverse lagging effect of falling raw material prices, judgment on market direction is required.

On the other hand, Lotte Chemical (KOSPI: 011170), which has a high proportion of basic olefins, posted an operating profit of only 110.1 billion won in the second quarter. Despite improved earnings from advanced materials (132.5 billion won) and subsidiaries, this was due to the operating profit of the basic materials division remaining at 2.3 billion won. As the spread of major products has fallen below the break-even point since June, an expansion of the deficit centered on basic materials is inevitable in the third quarter, and an earnings improvement is expected after 2027 when the restructuring effects from reorganizing the Daesan and Yeosu businesses are reflected. Meanwhile, Kolon Industries (KOSPI: 120110) recorded a second-quarter operating profit of 98.7 billion won due to the strong performance of the chemical division, an increase of 118.0% year-on-year, and beat the consensus (78.4 billion won) by 26%. The fact that it successfully turned a profit for the first time with the full-scale sale of CPI films for foldable phones proves that specialty advancement is the key to survival in the chemical sector.

Consumer Goods & Cosmetics: Overseas Expansion Overcoming Domestic Limits, Proven by Earnings Surprises
The overseas territory expansion of K-beauty and the diversification of distribution channels are driving the qualitative growth of the retail and cosmetics sectors. Cosmecca Korea (KOSDAQ: 241710), a cosmetics Original Development Manufacturing (ODM) company, recorded consolidated second-quarter sales of 226.1 billion won and an operating profit of 32.1 billion won, increasing by 40.0% and 39.0% respectively year-on-year, achieving record-high performance. While domestic business sales surged 63.0%, this was due to the advancement of its portfolio through client diversification and the expansion of hero SKUs. PharmaResearch (KOSDAQ: 214450), which posted second-quarter sales of 178.7 billion won and an operating profit of 66.5 billion won, also rode the momentum of record-breaking earnings as its cosmetics sales surged 95.6% year-on-year.

In the retail industry, GS Retail (KOSPI: 007070) achieved a convenience store same-store sales growth rate of 7.5% and recorded an operating profit of 109.4 billion won (a 27.5% increase year-on-year) in the second quarter, posting an earnings surprise. BGF Retail (KOSPI: 282330) also continued its improvement trend as its convenience store performance exceeded market expectations. Conversely, Lotte Shopping (KOSPI: 023530) saw a 121.2% year-on-year increase in second-quarter operating profit, but fell short of market expectations due to the reflection of one-off costs such as Lotte Cultureworks' content inventory losses. This reveals that only companies with a stable business structure and a secured foreign consumer base are succeeding in defending their profitability meaningfully amidst concerns of domestic demand contraction.

Market Signals

• Kumho Petrochemical Significantly Exceeds Consensus: Second-quarter operating profit was 339 billion won, beating the consensus (147 billion won) by 131%, and the performance of all business divisions, led by synthetic rubber, improved due to passing the surge in raw material prices onto selling prices.

• Sanil Electric's New Orders Surge: New orders in the second quarter surged 36% from the previous quarter to 243.5 billion won, and special transformer sales grew 51.7% year-on-year, achieving an operating profit margin of 37.8%.

• Cosmecca Korea Posts Record-High Performance: Second-quarter sales were 226.1 billion won and operating profit was 32.1 billion won, increasing by 40.0% and 39.0% respectively year-on-year, exceeding market expectations.

• Intellian Technologies' Profitability Greatly Improves: Second-quarter consolidated sales of 96.69 billion won and operating profit of 8.70 billion won are expected to increase by 29.4% and 393.5% respectively year-on-year.

Epoch View: Investment Implications

While the New York stock market showed weakness yesterday due to upward pressure on interest rates and oil prices, the domestic stock market continued a rebound trend centered on individual stocks that have proven solid earnings. This suggests that despite concerns about macroeconomic volatility, the concentration of funds into companies equipped with fundamental strength in their core business and pricing power is intensifying. In particular, the earnings surprises in power equipment, high value-added petrochemical specialties, and K-beauty and retail sectors with high overseas proportions have proven that companies succeeding in passing cost increases onto selling prices or expanding their territory in an inflationary environment guarantee long-term portfolio stability. Ultimately, in a transitional phase where uncertainty in the global macro environment persists, investment appeal is determined by confirmed performance figures rather than simple expectations.

This content was created using 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. It is an objective summary based on collected data and does not constitute a solicitation or recommendation to invest in any specific stock.