EconoTicker

LG Energy Solution (KS:373220) forecast a sharp decline in second-quarter operating profit, as weak global electric-vehicle demand continued to pressure the battery maker’s earnings.

The South Korean company estimated April–June operating profit at 113.3 billion won, down 77% from 492.1 billion won in the same period a year earlier. However, the result still showed a recovery from the 207.8 billion won operating loss recorded in the January–March quarter.

Revenue showed a stronger performance. LG Energy Solution estimated second-quarter revenue at 7.56 trillion won, up 24.8% year-on-year and 15.3% quarter-on-quarter, according to preliminary results.

The data suggests that while sales improved, profitability remains under pressure due to weak EV demand, pricing pressure, and margin challenges across the battery sector. The company noted that the preliminary results are subject to external audit and may differ from final earnings.

Possible market effect:

The report is mixed but cautious for LG Energy Solution (KS:373220). The sharp annual profit decline is negative for sentiment, but the recovery from a first-quarter operating loss and stronger revenue growth may limit downside pressure. Overall market sentiment looks neutral-to-slightly bearish. The stock does not look strongly buyable yet unless investors see clearer signs of EV demand recovery and margin improvement. For now, it is more suitable for neutral positioning or selective buying only after confirmation of earnings stabilization.

Q: Why did South Korea’s LG Energy Solution expect lower Q2 operating profit?

A: LG Energy Solution expected lower Q2 operating profit mainly because sluggish global electric-vehicle demand continued to weigh on battery-sector earnings.

Q: Did LG Energy Solution improve compared with the previous quarter?

A: Yes. Although operating profit fell sharply from a year earlier, the company recovered from a 207.8 billion won operating loss in the first quarter to an estimated 113.3 billion won operating profit in the second quarter.

Q: Is LG Energy Solution stock buyable after the Q2 preliminary results?

A: The sentiment is neutral-to-slightly bearish. Stronger revenue and a return to operating profit are positive, but the 77% annual profit drop keeps the stock under pressure until EV demand and margins show clearer recovery.

Source: LG Energy Solution preliminary earnings results.

Importance level: High

Samsung Electronics said on Tuesday that its second-quarter operating profit likely jumped 19-fold from a year earlier, driven by surging memory-chip prices and strong AI-related demand.

The world’s largest memory chipmaker estimated April–June operating profit at 89.4 trillion won / $58.44 billion, beating the LSEG SmartEstimate of 87.3 trillion won and far above the 4.7 trillion won reported a year earlier. Revenue is expected to rise 129% YoY to 171 trillion won.

However, the strong earnings update failed to calm investor concerns about the durability of the AI-driven chip rally. Samsung shares fell as much as 7.9% in morning trade, while SK Hynix dropped as much as 7.3%, dragging South Korea’s KOSPI down 6%.

Analysts said the market had already priced in strong results after Samsung’s pre-results rally. Some investors had expected operating profit to exceed 90 trillion won, especially after record memory prices. Samsung also booked provisions for large worker bonuses linked to semiconductor operating profit; analysts said without those provisions, operating profit would likely have exceeded 100 trillion won.

Memory prices rose sharply during the quarter as AI demand expanded beyond HBM into conventional DRAM and NAND. Citi Research said DRAM and NAND average selling prices rose 44% and 53% QoQ, respectively, in Q2. Analysts also noted that higher HBM production has tightened supply of conventional memory used in smartphones, PCs, and enterprise servers.

The main risk is whether AI infrastructure spending can continue at the current pace. Investors remain concerned that delays in U.S. data-center construction, power shortages, labor constraints, or weaker returns on AI investment could slow chip demand. Goldman Sachs expects AI-related capital expenditure by Meta, Microsoft, Amazon, and Alphabet to reach $5.3 trillion between fiscal 2025 and 2030, suggesting long-term demand remains strong, even if short-term positioning is crowded.

Samsung will release detailed results on July 30, including earnings breakdowns by business division.

Possible market effect:

The data is fundamentally positive for Samsung’s memory business, but the market reaction is negative because expectations were already very high. The selloff shows investors are more focused on whether the AI memory boom is sustainable than on the headline earnings beat. If memory prices remain strong and AI capex continues, the pullback may become a selective buying opportunity; however, short-term volatility in Samsung, SK Hynix, and KOSPI remains elevated.

Market sentiment:

Samsung Electronics: Neutral to slightly buyable after the selloff, but valuation-sensitive

SK Hynix: Neutral; vulnerable to AI-cycle profit-taking

South Korean chip sector: Selectively buyable, but volatile

KOSPI: Short-term sell pressure

AI memory/HBM theme: Structurally positive, but crowded

Q: How much operating profit did Samsung estimate for Q2?

A: Samsung estimated 89.4 trillion won / $58.44 billion in second-quarter operating profit, beating the 87.3 trillion won LSEG SmartEstimate.

Q: Why did Samsung shares fall despite strong earnings?

A: Samsung shares fell because strong earnings had already been priced in, while investors remained concerned about the sustainability of the AI-driven memory-chip boom.

Q: Is Samsung stock buyable after the selloff?

A: Samsung is neutral to slightly buyable for investors focused on memory-price strength and AI demand, but short-term traders should be cautious because valuation risk and AI-cycle concerns remain high.

Source: Samsung regulatory filing; LSEG; Citi Research; Goldman Sachs; Reuters

Importance level: Medium

European stocks opened near record levels on Monday, July 6, as the STOXX 600 stayed close to historic highs following last week’s strong rally.

The recent momentum has been supported by a broad-based market rotation, as signs of cooling inflation and a softer U.S. labor market renewed optimism that global interest-rate pressure may be easing.

Major European indexes were little changed in early trade. Germany’s DAX, France’s CAC 40, and London’s FTSE 100 all traded flat, suggesting investors were consolidating gains after last week’s strong performance.

European bourses posted a strong rally last week, with the STOXX 600 and Euro Stoxx 50 reaching fresh historic peaks. Germany’s DAX led the advance, helped by strong rebounds in major stocks such as Siemens and broader investor appetite beyond the technology sector.

Among individual names, easyJet jumped nearly 10% after agreeing to Castlelake’s takeover proposal, making it one of the key movers in European trading.

Possible market effect:

The market effect is cautiously positive. European equities remain supported by easing rate-pressure expectations and broader sector rotation, but flat moves in the DAX, CAC 40, and FTSE 100 suggest investors may be waiting for fresh catalysts after last week’s record highs. easyJet’s sharp move could also support sentiment in travel and airline stocks.

Market sentiment:

STOXX 600: Neutral to slightly buyable near record levels

Euro Stoxx 50: Neutral to slightly buyable

DAX: Neutral after recent strength

CAC 40: Neutral

FTSE 100: Neutral

easyJet: Speculative buyable after takeover news

Q: Why did European stocks open near record levels on Monday, July 6?

A: European stocks remained supported by last week’s rally, cooling inflation signals, softer U.S. labor-market data, and hopes that global interest-rate pressure may ease.

Q: How did major European indexes trade at the open?

A: Germany’s DAX, France’s CAC 40, and London’s FTSE 100 were all flat.

Q: Why did easyJet shares jump nearly 10%?

A: easyJet shares rose nearly 10% after the company agreed to Castlelake’s takeover proposal.

Source: European market data; easyJet takeover announcement

Importance level: Medium

Asian technology and chip-related shares faced profit-taking on Monday, July 6, after last week’s rebound, but many chipmakers managed to recover and close higher by the end of the session.

Broader regional equity performance was mixed. South Korea’s KOSPI fell 3.2%, while Japan’s Nikkei 225 lost 1.3%, showing that investors remained cautious toward technology-heavy markets. In mainland China, the CSI 300 and Shanghai Composite both eased 0.6%, suggesting risk appetite toward tech shares stayed limited despite improving global sentiment.

Elsewhere in Asia, market performance was stronger. Hong Kong’s Hang Seng rose 1.1%, Indonesia’s Jakarta Stock Exchange Composite Index added 0.8%, and Australia’s S&P/ASX 200 was little changed.

Investors will also watch Taiwan’s June trade figures for signs that AI-related demand continues to support technology exports.

Possible market effect:

The market effect is mixed. Profit-taking in chipmakers shows investors are still sensitive to valuation risk after the recent rebound, but late-session recovery in many chip names suggests AI-linked demand remains a key support. Taiwan’s trade data could become important for confirming whether AI export momentum is still strong.

Market sentiment:

Asian chipmakers: Neutral to slightly buyable after recovery

KOSPI: Slightly sell

Nikkei 225: Neutral to slightly sell

Hang Seng: Slightly buyable

CSI 300 / Shanghai Composite: Neutral to slightly sell

ASX 200: Neutral

Q: Why did Asian chipmakers face pressure on Monday, July 6?

A: Asian chipmakers faced profit-taking after last week’s rebound, as investors remained cautious toward technology valuations.

Q: Did Asian chipmakers stay weak by the close?

A: No. Although profit-taking hit the sector earlier, many chipmakers recovered and closed higher by the end of the day.

Q: Why are Taiwan’s June trade figures important for technology markets?

A: Taiwan’s trade data is important because it can show whether AI-related demand is still supporting technology exports.

Source: Asian market data

Importance level: Medium

Saudi Aramco (2222.SR) edged lower on Sunday on the Tadawul, trading at 26.04 SAR as the latest OPEC+ quota increase added to near-term pressure on oil prices.

The stock remained near the middle of its 52-week range of 23.04 to 27.96 SAR, showing that investors are not pricing in extreme weakness, but are still cautious as the supply outlook becomes heavier.

As the world’s largest oil exporter, Saudi Aramco is one of the clearest market indicators of how investors view OPEC+ pricing strategy, oil supply expectations, and Saudi energy-market sentiment.

Possible market effect:

The move is slightly negative for Saudi energy sentiment. If higher OPEC+ quotas continue to pressure crude prices, Aramco could face more valuation pressure. However, the stock’s position near the middle of its 52-week range suggests the market is still balanced rather than aggressively bearish.

Market sentiment:

Saudi Aramco: Neutral to slightly sell

Tadawul energy sector: Neutral to slightly negative

Brent / WTI crude oil: Slightly sell

Saudi equities: Neutral

Q: What was Saudi Aramco’s latest trading price on Sunday?

A: Saudi Aramco traded at 26.04 SAR on the Tadawul.

Q: Why did Saudi Aramco edge lower?

A: The stock slipped as the new OPEC+ quota increase added to near-term oil-price headwinds.

Q: Is Saudi Aramco currently buyable or sellable?

A: Saudi Aramco is neutral to slightly sell in the short term, mainly because weaker oil-price expectations may pressure energy-sector sentiment.

Source: Tadawul market data

Importance level: High

Japanese defense-related stocks climbed sharply on Monday, July 6, after Yomiuri reported that Japan’s government is planning to establish a new bureau within the Defense Ministry to strengthen international defense cooperation and support defense equipment exports.

According to the report, the government and ruling coalition have started coordinating plans for a bureau focused on international cooperation and exchanges with allied and like-minded countries. The move comes as Japan seeks to strengthen its defense capabilities amid a more difficult regional security environment.

The proposal is expected to be included in the government’s annual economic and fiscal policy guidelines later this month. If approved, the government plans to submit legislation to amend the Ministry of Defense Establishment Law during next year’s ordinary Diet session. Yomiuri said this would mark the ministry’s first organizational expansion since 2007.

Defense stocks reacted strongly. Mitsubishi Heavy Industries (TYO: 7011) jumped nearly 7% by 03:38 GMT. IHI Corp (TYO: 7013) climbed 5%, while Kawasaki Heavy Industries (TYO: 7012) advanced 7%. Tokyo Keiki (TYO: 7721) surged more than 10%, and NEC Corp (TYO: 6701) gained 4%.

The new bureau would reportedly separate international cooperation responsibilities from the Defense Policy Bureau, allowing the ministry to better manage expanding defense ties with partners in Southeast Asia and Europe.

Possible market effect:

This is positive for Japan’s defense, aerospace, shipbuilding, electronics, and security-technology sectors. The report supports expectations of stronger government backing for defense exports and international defense cooperation. However, after sharp one-day gains, some stocks may face short-term profit-taking.

Market sentiment:

Japanese defense stocks: Buyable, but short-term overheated

Mitsubishi Heavy Industries: Buyable on defense momentum

Kawasaki Heavy Industries: Buyable, but watch volatility

Tokyo Keiki: Speculative buyable after strong surge

Japanese yen: Neutral

Q: Why did Japanese defense stocks rise on Monday, July 6?

A: Japanese defense stocks rose after Yomiuri reported that Japan plans to create a new Defense Ministry bureau to expand international defense cooperation and support defense equipment exports.

Q: Which Japanese defense stocks gained the most?

A: Tokyo Keiki surged more than 10%, while Mitsubishi Heavy Industries and Kawasaki Heavy Industries each gained around 7%.

Q: Is the Japanese defense sector currently buyable?

A: The sector is buyable from a policy-momentum perspective, but short-term traders should watch for profit-taking after the sharp rally.

Source: Yomiuri; Tokyo market data

Foxconn, formally known as Hon Hai Precision Industry (TW:2317), reported a sharp revenue increase in the April–June quarter, supported by strong demand for artificial intelligence-related products. The world’s largest contract electronics maker said second-quarter revenue surged 39.8% year-on-year to T$2.513 trillion, equal to about $78.71 billion.

The result beat Reuters/LSEG estimates of T$2.372 trillion, showing stronger-than-expected momentum in Foxconn’s cloud and networking business. The company said AI development continued to drive demand for cloud and networking products, while consumer electronics also recorded solid growth.

Foxconn remains a key company in the global technology supply chain. It is the largest server maker for NVIDIA (NASDAQ) and one of the main iPhone assemblers for Apple (NASDAQ). This makes Foxconn’s latest revenue data important not only for Taiwan’s technology sector, but also for the broader AI, semiconductor, and consumer electronics markets.

However, the company also warned that global political and economic volatility could affect its outlook, without giving specific details. Foxconn said AI rack shipments are expected to continue growing in the current quarter, while seasonal trends should also support consumer electronics sales.

Possible market effect:

The data is positive for Foxconn (TW:2317) and supportive for the broader AI hardware supply chain, including sentiment around NVIDIA and AI server demand. Market sentiment toward Foxconn looks bullish-to-neutral after the strong revenue beat, but geopolitical risks may limit aggressive upside. The stock may be considered buyable on pullbacks or confirmation of momentum, while chasing after a sharp rally would carry higher risk.

Q: Why did Taiwan’s Foxconn revenue increase in Q2?

A: Taiwan’s Foxconn revenue increased mainly because of strong demand for AI-related cloud and networking products, along with solid growth in consumer electronics.

Q: Did Foxconn’s Q2 revenue beat market expectations?

A: Yes. Foxconn reported T$2.513 trillion in second-quarter revenue, above the Reuters/LSEG estimate of T$2.372 trillion.

Q: What is the market sentiment for Foxconn after the Q2 revenue report?

A: The sentiment is bullish-to-neutral. Strong AI demand supports the stock, but geopolitical and economic volatility may keep investors cautious.

Source: Foxconn company statement; Reuters/LSEG estimates.

Importance level: High

easyJet announced on Sunday that it has agreed in principle to a takeover offer from Castlelake at £6.90 per share, valuing the airline at around £5.23 billion, according to a Reuters report.

This is the fifth and highest offer from the Minneapolis-based private credit firm. Castlelake reportedly lifted its bid from an opening 560 pence to 690 pence per share after first approaching easyJet on May 29. easyJet shares (LON: EZJ) closed Friday at 558.2 pence, leaving the stock at roughly a 20% discount to the offer price.

The two sides have also extended the “put up or shut up” deadline to August 3 at 5 p.m. London time, according to a Bloomberg report citing a joint statement from the companies.

Castlelake has partnered with Mark Breen and Peter Bellew, a former easyJet executive who left the airline in 2022. The firm said it intends to support easyJet’s future growth and fleet modernization programme.

easyJet’s strategic value comes from its modern Airbus A320-family fleet and valuable airport slots in London, Milan, and Geneva. However, the airline remains under financial pressure. Its latest first-half FY2026 results showed EPS of -£0.501, missing analyst expectations of -£0.4345 by 15.3%, as higher jet fuel costs linked to the Iran conflict and softer summer booking trends weighed on margins.

The Haji-Ioannou family, linked to founder Stelios Haji-Ioannou, remains the largest single shareholder with a 15.3% stake, making its position important for any final deal outcome.

Possible market effect:

The offer is strongly supportive for easyJet shares in the short term because the proposed 690 pence bid is well above Friday’s close of 558.2 pence. However, the large discount to the offer price shows that investors may still be pricing in execution risk, shareholder approval risk, or uncertainty around whether a binding deal will be finalized before the August 3 deadline.

Market sentiment:

easyJet / EZJ: Speculative buyable, but with deal-risk caution

UK airline sector: Neutral to slightly positive

European travel stocks: Neutral to slightly positive

GBP impact: Neutral

Q: What is Castlelake’s takeover offer for easyJet?

A: Castlelake’s offer is £6.90 per share, valuing easyJet at around £5.23 billion.

Q: How much upside does the offer imply compared with easyJet’s Friday closing price?

A: easyJet closed Friday at 558.2 pence, which is roughly a 20% discount to the 690 pence offer price.

Q: Is easyJet stock buyable after the takeover offer?

A: easyJet looks speculative buyable from an event-driven perspective, but the trade carries deal-execution risk until a final binding agreement is confirmed.

Source: Reuters; Bloomberg,

Importance level: Medium

Investors are becoming more cautious about high valuations across the artificial intelligence supply chain, especially after recent volatility in semiconductor shares. While optimism remains strong for software and platform companies that could benefit from broader AI adoption, the market is questioning whether the rally in AI-linked chip stocks can continue at the same pace.

Market participants are also watching whether major technology companies can regain leadership after recent sector rotation. Apple shares have strengthened on optimism around its upcoming iPhone lineup, while weakness in AI-focused semiconductor stocks has raised concerns about the sustainability of this year’s technology-led market rally.

Possible market effect:

The market effect is mixed. Stronger Apple momentum may support large-cap technology sentiment, but continued weakness in semiconductor stocks could pressure the Nasdaq 100 and broader AI-related trades. If investors rotate from expensive chip names into software, platforms, or mega-cap tech, the rally may continue but become more selective.

Market sentiment:

Nasdaq 100: Neutral to mildly buyable, but selective

AI semiconductor stocks: Neutral to slightly sell

AI software/platform stocks: Neutral to buyable

Apple: Mildly buyable while iPhone optimism remains active

Q: Why are investors questioning the U.S. AI rally?

A: Investors are questioning the rally because valuations across the AI supply chain remain high, while recent volatility in semiconductor shares has created doubts about the sustainability of gains.

Q: Is the AI trade still positive for U.S. technology stocks?

A: Yes, but it is becoming more selective. Software and platform companies still have positive sentiment, while AI-focused semiconductor stocks face more valuation pressure.

Q: Why are Apple shares gaining strength?

A: Apple shares have strengthened because of optimism surrounding the company’s upcoming iPhone lineup.

Source: Market report provided

Importance level: Medium

Traders will also focus on the start of the second-quarter earnings season, with PepsiCo (NASDAQ: PEP) and Delta Air Lines (NYSE: DAL) among the first major U.S. companies scheduled to report results.

These reports could give investors an early view of corporate demand, consumer spending, travel activity, profit margins, and pricing power. PepsiCo’s results may offer signals about consumer staples and food-and-beverage demand, while Delta’s earnings may provide insight into travel demand, fuel-cost pressure, and airline profitability.

Possible market effect:

Strong earnings from early reporters could support risk sentiment and help U.S. equities extend recent gains. Weak guidance, margin pressure, or cautious consumer-demand commentary could create short-term pressure, especially on consumer, travel, and cyclical stocks.

Market sentiment:

U.S. equities: Neutral to mildly buyable before earnings

PEP: Neutral, waiting for results

DAL: Neutral, waiting for results

USD: Neutral; stronger risk appetite may slightly reduce safe-haven demand

Q: Which major U.S. companies are among the first to report second-quarter earnings?

A: PepsiCo and Delta Air Lines are among the first major companies expected to report Q2 results.

Q: Why are PepsiCo and Delta earnings important for markets?

A: PepsiCo can show consumer staples demand and pricing power, while Delta can provide signals about travel demand and airline profitability.

Q: Could the start of U.S. earnings season affect stock market sentiment?

A: Yes. Strong results may support risk appetite, while weak guidance or margin pressure could hurt market sentiment.

Source: Market report provided

Importance level: Medium

U.S. stock index futures moved higher in Asian trading on Monday, extending momentum after weekly gains in the holiday-shortened week. Investors continued to reassess artificial intelligence-linked trades, while markets waited for the minutes of the Federal Reserve’s June policy meeting.

Nasdaq 100 Futures outperformed, rising 0.8% to 29,779.75 points by 01:50 ET / 05:50 GMT. S&P 500 Futures added 0.3% to 7,550.25 points, while Dow Jones Futures were nearly flat at 53,199.0 points.

The major U.S. indexes also ended the previous week higher despite choppy trading. The Dow Jones Industrial Average rose about 2% to a record close, marking its fourth consecutive weekly gain, while the S&P 500 and Nasdaq Composite also advanced nearly 2% each.

Possible market effect:

The move shows that risk appetite remains positive, especially in technology and AI-linked sectors. Nasdaq outperformance suggests investors are still willing to buy growth and tech exposure, but the upcoming Fed minutes could affect sentiment if they signal a more cautious or hawkish policy outlook.

Market sentiment:

Nasdaq 100 Futures: Buyable, but watch Fed minutes

S&P 500 Futures: Mildly buyable

Dow Jones Futures: Neutral

USD: Neutral to slightly buyable if Fed minutes sound hawkish

Q: Why did U.S. stock futures move higher on Monday?

A: U.S. stock futures rose as investors extended last week’s positive momentum and reassessed AI-linked trades ahead of the Federal Reserve’s June meeting minutes.

Q: Which U.S. futures index performed the best in Asian trading?

A: Nasdaq 100 Futures performed the best, rising 0.8% to 29,779.75 points.

Q: Is the U.S. stock market sentiment still positive?

A: Yes, the short-term sentiment remains positive, especially for technology and AI-linked stocks, but the Fed minutes remain an important risk event.

Source: Market data cited in the provided report

Importance Level: High

South Korea’s benchmark KOSPI index fell 3.8% last week, while its 12-month forward price-to-earnings ratio dropped to the lowest level since the Global Financial Crisis, according to a recent note from Goldman Sachs.

Foreign investors accelerated their exit from the market, selling a net 19.87 billion Korean won worth of KOSPI shares in the week ending July 3. Technology stocks accounted for most of the outflows. Year-to-date, foreign net selling on the KOSPI has reached 157.50 billion won.

Domestic investors partly offset the pressure. Local institutions bought a net 8.16 billion won, while retail investors purchased 11.12 billion won during the week.

Sector performance was mixed. Banking, Securities, and Leisure outperformed, while Technology, Insurance, and Retail were the weakest sectors. Technology fell 7.6% relative to the broader market, while Insurance and Retail each declined 5.7%.

Despite the selloff, earnings revisions improved. The KOSPI’s 12-month forward EPS was revised up 4.8%, with Leisure seeing the strongest upgrade and Chemicals recording the steepest downgrade.

Goldman Sachs also presented a stress-test scenario showing potential upside even under a severe earnings cut. Assuming a 33% earnings downgrade, in line with the median drawdown across six previous market troughs since 2008, and applying the median forward P/E at historical EPS bottoms of 11.4 times, Goldman calculated a potential KOSPI level of 8,750. This was based on earnings of 771, derived from current consensus next-12-month EPS of 1,150 after a 33% cut.

The Korea Equity Risk Barometer, known as the GSSRKERB Index, fell to -1.5, which Goldman described as “risk-averse territory.” The bank said the indicator can work as a contrarian signal when large market moves have already occurred and may point to more constructive forward equity returns.

Technically, the KOSPI’s Relative Strength Index fell to its lowest level since the end of March 2026, while the index broke below its 50-day moving average.

In currency and bond markets, the Korean won strengthened 0.3% against the U.S. dollar during the week, but weakened 0.2% against both the Japanese yen and the euro. The 3-year Korea Treasury bond yield rose to 3.75%, while the 10-year yield climbed to 4.20%.

MSCI Korea fell 5.5% for the week and now trades at a 55% discount to MSCI AC World on a forward P/E basis.

Market Sentiment: KOSPI — Neutral to Buy; Korean Technology — Sell; KRW — Neutral; Korea Treasury Bonds — Neutral to Sell

The KOSPI carries a Neutral to Buy bias because valuation has reached extreme historical lows and Goldman’s risk indicator points to a potentially constructive contrarian setup. However, Korean technology remains under pressure due to heavy foreign outflows and relative underperformance. Korea Treasury bonds are Neutral to Sell as yields moved higher.

Possible Market Effect:

The sharp decline in valuation may attract long-term investors looking for oversold opportunities in Korean equities. However, continued foreign selling, weakness in technology stocks, and rising bond yields could keep near-term volatility elevated. If earnings revisions remain positive and foreign outflows slow, the KOSPI may stabilize or recover from depressed valuation levels.

Q: How much did South Korea’s KOSPI fall in the week ending July 3?

A: The KOSPI fell 3.8% during the week ending July 3.

Q: Why is Goldman Sachs’ KOSPI valuation signal important?

A: Goldman Sachs said the KOSPI’s 12-month forward P/E ratio fell to the lowest level since the Global Financial Crisis, suggesting a historically depressed valuation.

Q: How much did foreign investors sell in KOSPI shares during the week?

A: Foreign investors sold a net 19.87 billion Korean won worth of KOSPI shares during the week ending July 3.

Q: Which South Korean sectors performed worst during the week?

A: Technology, Insurance, and Retail were the weakest sectors, with Technology down 7.6% relative to the broader market and Insurance and Retail each down 5.7%.

Q: What KOSPI level did Goldman Sachs calculate under its stress-test scenario?

A: Goldman Sachs calculated a potential KOSPI level of 8,750 using a 33% earnings downgrade and a forward P/E multiple of 11.4 times.

Q: What discount does MSCI Korea trade at versus MSCI AC World?

A: MSCI Korea now trades at a 55% discount to MSCI AC World on a forward P/E basis.

Source: Goldman Sachs.