Heightened market turbulence has damped investor confidence, but KB Securities says its principal outlook for the KOSPI's correction and recovery trajectory remains unchanged.
The firm notes that markets seldom rebound in a straight line after large declines. Citing historical patterns, KB Securities highlights that "W-shaped recoveries dominate" following drops exceeding 15 percent in a single week. In commentary, strategist Euntaek Lee observes that "markets tend to form a W-shaped recovery rather than a V-shaped rebound," adding that the second trough is "often lower than the first."
Reflecting that pattern, KB Securities chose not to implement a 50-day moving-average rule as a response during the most recent sell-off.
On sizing the downside, the firm maintains an expectation of a 15%-23% correction for the KOSPI. Its tactical recommendation is to accumulate on dips below 5,300 points rather than adopt an outright bearish stance.
Geopolitical developments are central to the near-term outlook. KB Securities frames the conflict involving Iran using a "tariff war" analogy - a way to compare the dynamics to those seen in the U.S.-China trade dispute. The firm warns that the United States could escalate through strikes on energy infrastructure and says it assigns "little credibility" to assertions that military actions have paused. Despite that, KB Securities does not consider the situation to be the onset of a systemic breakdown.
Regarding prospects for a diplomatic resolution, the firm judges that a fully reconciled U.S.-Iran agreement is unlikely. However, it allows that a limited ceasefire could become a de facto end state, likening that potential outcome to the Phase One trade arrangement in terms of being a partial, not full, settlement.
In sum, KB Securities argues that investors should prepare for a choppy recovery characterized by potential secondary drawdowns, while monitoring geopolitical developments that could disproportionately affect energy-related exposures. The firm retains a constructive accumulation posture at specified KOSPI levels rather than shifting to negative positioning.