[Market Insight] Is 'Sell America' Reemerging? KOSPI Faces Increasing Pressure

# KOSPI Surges to 2,620 Amid Five-Week Rally; Foreign Investors Maintain Three-Week Buying Streak ## U.S.-China Trade Progress, Nvidia CEO's COMPUTEX Appearance Lift Sentiment ## Overbought Market Worries, Moody’s U.S. Credit Downgrade Could Increase Volatility SEOUL—South Korea's KOSPI extended its gains last week, marking the fifth consecutive week of advances and rebounding to the 2,620-point range. Investor confidence was bolstered by the positive commencement of high-level U.S.-China tariff discussions. Semiconductor stocks rallied following news of U.S. chipmaker Nvidia’s sizeable supply contract with Saudi Arabia. However, elevated currency volatility limited further expansion in the stock index. This week, market observers will scrutinize whether the renewed optimism in semiconductor equities and ongoing foreign net purchases will drive additional KOSPI gains. Nonetheless, persistent concerns about overbought conditions and Moody’s recent downgrade of the U.S. credit rating could amplify short-term volatility. ## KOSPI Climbs 1.92% as U.S.-China Trade Talks Advance On May 16, South Korea’s key KOSPI rose by 49.60 points, or 1.92%, to 2,626.87 from the previous week, according to Yonhap Infomax and the Korea Exchange. This signifies a five-week winning streak for the index. The market was invigorated by positive outcomes from U.S.-China talks, including a 90-day mutual tariff reduction. Adding to the optimism, Nvidia announced a large-scale AI chip deal with Saudi Arabia, propelling semiconductor-related stocks. SK Hynix surpassed the 200,000-won mark for the first time in months, while Samsung Electronics reached 57,000 won. However, gains were limited by rotational flows as investors alternated focus on beneficiaries and losers of tariff adjustments. Currency-related concerns, heightened by South Korea-U.S. foreign exchange stabilization discussions, also dampened sentiment. ## Foreign and Institutional Investors Propel Buying; Retail Investors Seek Profits From May 12–16, foreign investors registered net purchases of 1.0764 trillion won ($812 million), continuing their buying spree for a third week. Institutional investors also turned net buyers, accumulating 533.7 billion won. In contrast, retail investors sold stocks worth 1.7654 trillion won to book profits. Sector performances showed significant gains in transportation and warehousing (+12.41%), machinery and equipment (+10.34%), and securities (+5.91%) due to global trade recovery expectations. Pharmaceuticals (-2.33%), non-metallic minerals (-2.41%), and metals (-1.61%) saw declines, with U.S. healthcare giant UnitedHealth’s stock drop impacting local pharma. The tech-heavy KOSDAQ edged up by 2.55 points, or 0.35%, to close at 725.07, marking its second straight weekly gain. ## Implications of COMPUTEX 2025 and Nvidia CEO’s Keynote Upcoming developments could provide further support for tech stocks. COMPUTEX 2025, Asia’s largest IT fair, will be held in Taiwan from May 20 to 23. Nvidia CEO Jensen Huang will deliver a keynote on May 19, followed by a press briefing on May 21, potentially unveiling new AI chips or technologies. Samsung Electronics’ progress in high-bandwidth memory (HBM) quality certification will also be closely watched. Last year, Huang introduced Nvidia’s sixth-generation HBM chip, “Rubin,” at the event, dispelling rumors about Samsung’s HBM production quality. “COMPUTEX could boost momentum in AI and physical AI domains such as robotics and autonomous vehicles,” said Na Jung-hwan, an analyst at NH Investment & Securities. ## Overbought Concerns and Moody’s Downgrade Adding Pressure While further gains are anticipated, some analysts warn against overzealous expectations. The recent rally has pushed the KOSPI into overbought territory. Institutions, once a key support for index levels, are now trimming positions for profit-taking. Without new catalysts after the tariff risk easement, sectoral rotation may limit index growth. Despite negotiation advances in U.S.-China trade tensions, the broader impact of trade-induced economic slowdown persists. Concerns are also growing about the potential for South Korean won appreciation to hurt export competitiveness. Global credit-rating agency Moody’s recently downgraded the U.S. credit rating from "Aaa" to "Aa1." While anticipated, the downgrade’s negative effects on global financial markets cannot be ignored. “The downgrade likely prompts profit-taking and heightens short-term volatility,” said Suh Sang-young, an analyst at Mirae Asset Securities. “Attention is needed on whether themes like ‘Sell America’ resurface and future policy decisions.” NH Investment & Securities predicts the KOSPI will trade between 2,550 and 2,690 this week. ## Key Economic Events This Week Analysts and investors will pay close attention to the following key economic indicators: - **May 19**: China April retail sales, industrial production; Eurozone April CPI - **May 20**: China May loan prime rate (LPR) - **May 21**: South Korea May export-import data (1–20 day period) - **May 22**: U.S. May S&P Global manufacturing and services PMI; Eurozone May S&P Global manufacturing and services PMI - **May 23**: U.S. April new home sales; Japan April CPI