Weekly Analysis: Emotion Cooled, KOSPI Rose (June 18–27, 2025)

Weekly Market Overview

During the 7 trading days from June 18 to 27, the KOSPI climbed approximately +2.8%, showing steady upward momentum. However, our news-based Investor Sentiment Index revealed a surprisingly downward trend in sentiment.

While most daily sentiment values were positive, the overall flow showed a gradual cooling following the emotional peak on June 20. This was captured in the data as a clear negative regression slope (-0.109).

This week’s market was thus defined by a divergence: emotion cooled, yet prices rose.

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Indicator	Regression slope	Interpretation
Sentiment index	-0.109	Gradual emotional cooling
KOSPI Index	+16.45pts/day	Strong upward trend

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What Caused the Sentiment-Price Divergence?

To understand why sentiment fell while prices rose, we need to examine not only the main drivers but also deeper structural forces.

Factor	Rule	Data Signal
Policy momentum	Core bullish catalyst	June 20 news surge on commercial law reform → Sentiment +2.30
Interest rate uncertainty	Short-term risk factor	Temporary VIX rebound (June 23–24), then fell sharply
Cross-asset support	Foreign inflows triggered	KRW appreciated ~₩18, WTI crude fell ~11%

Additional Supporting Factors

1. Sentiment fatigue / lagged effect

   • Policy optimism from earlier weeks may have already been priced in.

   • Sentiment cooled even as markets continued higher.

2. Divergence between domestic sentiment and foreign inflows

   • Our sentiment model is based on Korean-language sources, capturing domestic investor psychology.

   • But the actual buying was largely driven by foreign investors—outside the sentiment scope.

3. Passive fund rebalancing (June-end)

   • End-of-quarter portfolio adjustments may have supported large-cap stocks independently of sentiment.

4. Underlying macro resilience

   • Economic indicators like exports and production remained solid, providing fundamental support

   • The market stood firm even as emotions waned.

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Conclusion: “Markets Can Climb Without Emotion”

The sentiment index reflects psychological momentum, but the market responds to policy, liquidity, and fundamentals. This week was a textbook example of such divergence.

“The crowd doesn’t have to cheer for the market to rise—structural forces are louder than noise.”

SentimentLab-3.pdf

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