The Power of the ‘EPS Rally’: Index Driven by Corporate Earnings

Honestly, I don’t think this KOSPI surge is merely a speculative rally. The key is corporate earnings. Securities firms are successively raising their 2026 KOSPI targets, and the background for this is ‘record-high upward revisions in earnings forecasts’. In the past, stock prices often rose first, leading to increased valuation burdens, didn’t they? But this time is different. Analysis suggests that the 12-month forward EPS (Earnings Per Share) forecast is rising along with stock prices, resetting the index’s upper limit itself.
This means it’s closer to an ‘EPS-driven rally’ rather than a ‘PER-overstretched rally’. The contribution of the semiconductor industry’s earnings is particularly significant. With earnings expectations for semiconductor leaders like Samsung Electronics and SK Hynix at record levels, it’s fair to say that their profits are pulling KOSPI up by the scruff of its neck. Korea Investment & Securities presented a 2026 KOSPI target of 5650, and DB Financial Investment even projected it could open up to 7044 points. Isn’t this absolutely crazy?

Semiconductors and AI: New Growth Engines for the Korean Economy

The Korean economy is expected to grow by 1.8-1.9% overall in 2026. This is a clear improvement from 2025, but what’s noteworthy here is the change in the growth method. In the past, exports led the way, but now, domestic demand recovery, including private consumption and construction investment, is expected to be the central axis of growth. However, that doesn’t mean exports are losing their power. In particular, semiconductor and AI-centric investments continue, changing the direction of growth for the Korean economy.
With the global AI cycle not yet over, combined with worldwide liquidity expansion and government policies to boost the stock market, there are even predictions that the Korean stock market could perform better than the US. The high valuation burden in the US also increases the likelihood of capital flowing into the Korean market, so ‘retail’ investors should also pay close attention to these trends. The top sectors commonly cited by major securities firms are semiconductors, AI infrastructure, and power equipment.

The Power of Retail Investors and Market Volatility

Another characteristic of the Korean stock market is the high proportion and significant influence of individual investors. The surge of Samsung Electronics stock to 90,000 won in 2021, and EcoPro’s rise to 1.5 million won last year, were ultimately thanks to massive buying by individual investors. A public opinion poll also showed that nearly half of the population expects the Korean stock index to rise in 2026, so the expectations of retail investors are clearly an important factor driving the market.
Of course, the market cannot be without volatility. External factors such as interest rate cuts, exchange rate fluctuations, and geopolitical risks always affect stock prices. It’s also important to remember that the Korean stock market tends to react particularly sensitively to dollar movements. In such a situation, rather than being swept away blindly, it seems like now is the time for prudent judgment, investing based on corporate fundamentals and the long-term growth potential of industries.

KOSPI200, A Key Market Indicator

Just as important as the KOSPI index is the KOSPI200 index. This is a representative index of the Korean stock market and is used as a trading target index in the derivatives market. It gathers the top 200 companies by industry in the Korean stock market, so its reliability is very high. The KOSPI200 constituent stocks are changed annually on the day after the second Friday of June, and are selected by comprehensively considering market representativeness, liquidity, and marketability.
When selecting constituent stocks, newly listed stocks less than one year old and administrative issues are excluded, and the market capitalization proportion by industry group is also considered, so not just any company gets in. Ultimately, being included in the KOSPI200 means being recognized by the market, so it’s good to refer to it when investing.
The 2026 KOSPI market looks like it will be a very interesting year. Expectations are high, especially given that it’s a bull market supported by corporate earnings. Of course, the market always holds unpredictable variables, but by understanding these major trends and responding wisely, couldn’t we seize good opportunities?

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Personally, every time this happens, I feel that the world of investment is truly difficult. It started to fall due to President Trump’s strong remarks, then stabilized again due to news from a strait in the Middle East. Today, I’d like to talk about what exactly happened that day and what we need to know.

## 1. Trump’s ‘Stone Age’ Remarks Freeze the Market

In fact, the US stock market was unusual from the start of the day. US President Donald Trump made very strong remarks about Iran. In a national address, he said, “We will hit Iran extremely hard for the next 2-3 weeks,” and even, “We will turn Iran back to the Stone Age.”

When such harsh words came out, the market had no choice but to react immediately. Investor sentiment rapidly contracted due to concerns about escalating geopolitical tensions, and the Dow Jones Industrial Average started to decline.

Honestly, I think such strong remarks directly affect international oil prices. In fact, the price of West Texas Intermediate (WTI) crude oil once surged by 13%. I realized once again how much impact a single unpredictable political statement can have on the global economy.

## 2. Strait of Hormuz Holds the Key to Reversal

But then, an unexpected reversal occurred in this frozen market. It was due to expectations regarding transit through the Strait of Hormuz. The Iranian Foreign Ministry announced that it was preparing a draft agreement with Oman to manage ship traffic.

As this news spread, market anxiety significantly decreased. International oil prices also gave back some of their gains, and while only the Dow Jones fell slightly, the S&P 500 and Nasdaq turned upward. Who would have known that the situation in the Middle East would play such a crucial role?

As many of you probably know, the Strait of Hormuz is a very important place where about 20% of the world’s seaborne oil transport passes. Ensuring safe passage through here is news that brings great relief to the global economy.

## 3. The Dual Face of the Strait of Hormuz: Transit Fee Controversy

But here’s another story. While Iran is preparing an agreement for safe passage through the Strait of Hormuz, it is actually showing signs of imposing a ‘transit fee’. The Iranian parliament reportedly approved a plan to impose transit fees on ships passing through the strait.

If this becomes a reality, there is talk that a transit fee of about $1 per barrel could be collected. For very large oil tankers, this could amount to billions of Korean Won. Honestly, this could lead to controversy over violations of international law and could be a significant burden for countries like ours that import crude oil.

Looking at this situation, I realize once again that the Strait of Hormuz goes beyond simply meaning ‘safe passage’ and exerts enormous influence on international politics and economics. I’m really interested to see how this transit fee issue will unfold in the future.

## 4. Market Resilience Seen Even Amidst Volatility

In conclusion, on April 2nd, the US stock market closed mixed, with President Trump’s strong remarks and expectations for transit through the Strait of Hormuz clashing. The Dow Jones Industrial Average fell by 0.13%, but the S&P 500 index rose by 0.11%, and the Nasdaq Composite index rose by 0.18%.

This situation shows that while the market reacts sensitively to geopolitical risks, it also has the resilience to recover quickly when diplomatic solutions or prospects for improvement are seen. As an investor, I think it’s really important to read these market trends well.

Of course, international situations are always unpredictable, but we should still try not to miss the big trends. I hope we all achieve successful results through wise investment!

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