The market is buzzing with debate over whether the KOSPI index will break 5000. [Photo=Yonhap News]

Since the start of the year, the KOSPI has continued its sharp ascent, dividing market attention between concerns of overheating and the possibility of the KOSPI reaching 5000. 

Although the index is setting new record highs daily, it is being assessed that the signals from the current market trend are different from interpretations solely based on simple optimism or bubble concerns. 

The key is not how much it has risen, but why such a rapid rise has been possible.

The most distinct characteristic of this rally is that despite the sharp surge in the index, the price-to-earnings ratio (PER) has not skyrocketed.

In a typical overheating phase, the PER rapidly increases as stock prices outpace the growth in corporate earnings. However, recently, the KOSPI has seen its earnings estimates, particularly for semiconductors, revised upward at a fast pace, absorbing a significant portion of the stock price increase. 

This is interpreted as a signal that the market is not betting on a short-term boom, but rather preemptively reflecting the assumption that current profitability and earnings structures will be maintained going forward. 

In simpler terms, this surge is a result of the judgment that "we can continue to earn as we are now" being reflected in prices, rather than an expectation of "we will earn more in the future." 

Therefore, while the index has risen rapidly, the PER has not strayed far from its historical average range. Looking at the numbers alone, it is difficult to definitively conclude that this is an overheating market. 

The movement of foreign capital can also be explained within this structural framework. 

Foreign investors do not purchase Korean stocks based on the premise of a strong won. 

The key is the judgment that exchange rates will not spiral out of control. The fact that the Federal Reserve is not rushing to cut interest rates but is not negating the direction, and maintains an attitude of controlling the pace once cuts begin, acts as a factor that lowers the possibility of a sharp decline in the won. 

Rather than expectations of a weaker dollar, the perception that the dollar will not surge unchecked is seen as the backdrop for foreign capital inflows. 

For this reason, exchange rates are closer to a safety net preventing a sharp decline rather than a driving force for this rally. 

The direct engine of the rise is the improved outlook and confidence in sustained profitability, centered on semiconductors and AI infrastructure. As a result, the recent market is not seeing a broad-based rise across all sectors, but rather a selective rally where capital is concentrated in specific sectors and large-cap stocks.

If these conditions are maintained, the KOSPI reaching 5000 is not an unrealistic figure based on calculations. 

If earnings estimates are maintained and PER moves within its normal range, the upside for the index remains open. 

What is important is that this process is not a runaway market driven by euphoria fueled by liquidity. A structure that allows for growth even without help from the U.S. has already been formed. 

The problem, however, still lies with the U.S. variables. 

If a rapid shift in the Fed's stance, a sharp rise in U.S. Treasury yields, a resurgence of dollar strength, and uncertainties surrounding trade and fiscal policy occur simultaneously, exchange rates and foreign capital flows can be quickly destabilized. 

And at the center of the political variables that could trigger this 'circuit breaker' is Trump. 

Trump favors interest rate cuts, but he is also an individual who has pursued increased tariffs and fiscal expansion concurrently. 

Tariffs can stimulate import prices and inflation expectations, while fiscal expansion can lead to increased Treasury issuance, creating upward pressure on Treasury yields. This can increase market interest rate and exchange rate volatility, separate from expectations of policy rate cuts. 

Furthermore, Trump's characteristic unpredictable remarks and policy approaches can create sufficient uncertainty to shake market expectations and positions, even without changing the Fed's policy path. 

Therefore, Trump is perceived not as a driver of the KOSPI's rise, but as the sole political variable capable of halting the ascent. 

The current market trend is closer to a phase where we hope for what Trump will *not* do, rather than expecting what he will do. 

In a structure where a tariff statement or a signal of fiscal expansion can immediately impact exchange rates and foreign capital flows, unnecessary conflicts can directly lead to market volatility. 

Ultimately, the current KOSPI rally can be defined as follows: 

The engine of the rise is in Korea, the circuit breaker is in the U.S., and Trump holds the handle.

KOSPI 5000 is a condition, not a declaration. And the core of that condition is not Trump's decision, but refraining from provoking Trump. 

This is the clearest signal the market is currently sending. 

By Kim Young, Reporter