South Korea’s KOSPI Composite Index has bounced back in the past few weeks after plunging to a multi-month low of KRW 2,287 earlier this month. It jumped to a high of KRW 2,517, up by 10.57% from its lowest level in April. This article explores the three main reasons why the blue-chip index has rebounded, and why the gains may be limited.

Why the KOSPI Composite is rising

The KOSPI index has bounced back due to rising hopes that US and South Korean negotiators will reach a deal that would reduce tariffs. 

Teams from the two countries have started talking, and South Korea is expected to make some concessions to lower the trade deficit. 

Donald Trump announced a large 25% tariff on all goods from the country when he announced his Liberation Day tariffs earlier this month. He then scaled back those tariffs to 10% to give room for talks.

Trump imposed those tariffs due to the country’s rising trade deficit. The US sold goods worth $65 billion to South Korea and imported $131 billion. Its South Korean imports include computer chips, cars, smartphones, and other high-tech equipment.

Therefore, analysts expect that the two sides will reach a deal that will lead to more South Korean purchases of US energy, planes, and other items.

South Korea GDP weakness and potential for rate cuts

The KOSPI index has jumped due to the ongoing economic weakness in South Korea. Data released on Thursday showed that the economy contracted in the first quarter as the political crisis hit consumer confidence.

The economy contracted by 0.2% on a QoQ basis and by 0.1% from the same period last year. This decline was primarily due to weak consumer spending and investment after the ousting of President Yoon Suk Yeul.

In a report released this week, the IMF warned that the South Korean economy is expected to grow by approximately 1% this year, down from the previous 2%.

A slowdown in South Korea’s economy means that the central bank will continue cutting interest rates. It started slashing rates in October last year, and has delivered more cuts after that, bringing the official cash rate to 2.75%, the lowest level since 2022.

Therefore, analysts believe that the central bank may deliver more cuts this year, a move that will lead to a rotation from bonds to stocks. Indeed, South Korean government bond yields have dropped, with the ten-year falling to 2.6% and the 30-year moving to 2.5%. These numbers have fallen from over 3% last year. 

The KOSPI Composite Index has also risen after some positive South Korean earnings as customers stockpiled some of the products. SK Kynix’s operating profit more than doubled as sales jumped sharply in Q1. Its sales topped those of Samsung in the Dram sector. It grew its market share in the Dram market to 36%.

The top-performing KOSPI Index stocks in the last 30 days were companies like Jayjun Cosmetic, The Wllbes, Kumho Electric, Enex, and Jeju Bank. All these stocks have soared by over 70% in the last 30 days.

On the other hand, the top laggards included companies such as SG Global, Joosung, Kolon Mobility, and Chinyang Chemical. 

KOSPI Index technical analysis

The weekly chart shows that the KOSPI Composite Index has bounced back in the past few weeks. It jumped from a low of KRW 2,287 earlier this month to KRW 2,500. It crossed the important resistance level at 2,390, its lowest swing in August and September last year.

The index remains below the 50-week and 100-week moving averages, a sign that bears remain in control. Additionally, it has already formed a head-and-shoulders chart pattern.

Therefore, the index may resume the downtrend in the coming weeks. More gains will be confirmed if the index rises above the 100-day moving average point at KRW 2,570. 

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Ola Electric share price has imploded after its initial public offering (IPO) in which the company raised $734 million from retail and institutional investors. The stock was trading at ₹53.50 on Thursday, the same range it has been in the past few days, and a few points above the year-to-date low of ₹45.7. This report explores whether the Ola stock will recover.

Why the Ola Electric share price has plunged

The Ola Electric stock price has declined significantly over the past few months, dropping from a high of ₹157.32 in August last year to ₹53.55. 

It has crashed after reports that the company moved from one crisis to another in the past few months. 

Data shows that sales of its electric motorcycles and scooters has crashed as competition from established brands like TVS and Bajaj soared. It also faced substantial customer complaints about its products.

The most recent numbers showed that its electric bike registrations fell by 74% in February to just 8,647. This slowdown is likely to continue this year, as reports indicate that the company is closing some of its stores. 

Ola Electric’s losses have continued growing, with a path towards profitability remaining murky. At the same time, the firm has faced some regulatory issues, especially because of the rising consumer complains, and for violating India’s Motor Vehicles Act. 

Read more: Ola Electric’s $734 million IPO: 2024’s largest in India—Should you invest?

Finances have deteriorated

Official statements from Ola Electric showed that its deliveries in Q3’FY25 dropped to 84,029 from 86,775 a year earlier. 

Its premium bikes sales dropped from 83,396 to 29,283. This decline was offset by the mass market bikes, whose sales rose from 3,379 to 54,746. 

This slowdown led to a significant decline in its automotive revenue and profitability. Its sales dropped from ₹1,336Cr to ₹1,075 Cr, while its earnings before interest tax, depreciation, and amortization worsened to  ₹309 Cr.

The consolidated revenue dropped to ₹1,069 Cr, while the EBITDA was a significant loss of ₹436 Cr.

Ola Electric is addressing these issues by investing in its servicing locations and expanding its portfolio. It has increased its products offerings to 14, and has entered the motorcycle industry, which it hopes will help it boost sales.

The company is also working to expand its distribution network through its own stores and other distributors. Additionally, its restructuring has enabled it to save approximately $10 million per month. It recently laid off 1,000 employees as losses jumped.

Will the Ola Electric share price recover?

Ola Electric, which sought to be the two-wheeler equivalent to Tesla, is facing a mountain of challenges. Cash burn is accelerating, and analysts believe that its goal of selling 50,000 products a month is not achievable.

The biggest concern is that its reputation is damaged, which will lead to more pressure as competition from established brands rose. Most importantly, this competition will always affect its margins as it has been forced to offer discounts.

Ola Electric is facing the same challenges that Tesla is going through. Tesla’s results showed that its profits plunged by over 70% in the first quarter as competition worsens. 

Ola stock chart by TradingView

The daily chart shows that the Ola Electric stock price bottomed at ₹45.72, where it formed a double-bottom, a highly popular bullish sign. There are signs that it has formed a falling wedge, comprising of two falling and converging trendlines. 

It has already moved above the upper side of the wedge. Therefore, while its fundamentals are fairly weak, there is a likelihood that the stock will bounce back, and possibly hit the key resistance at ₹67, the lowest swing in December last year.

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The Kering share price has imploded in the past few years as its sales growth waned in key markets, especially in China. It stock trades at €175, down from the 2021 high of €723. This decline has led to a substantial decline in market cap, which fell from €98.9 billion to €22 billion, or a €76 billion wipeout. 

Gucci sales continue plunging

Luxury goods sales have declined in recent years as the wealthy have scaled back their purchases. This slowdown occurred in most countries, particularly in China, a nation that has historically produced numerous millionaires and billionaires. 

Customers have also had to deal with a volatile stock and crypto market and high interest rates in key countries. In China, many of them dealt with the collapse of the real estate market that wiped out trillions in value. 

Most luxury goods companies have experienced decline during this period. For example, Aston Martin Lagonda, the manufacturer of high-performance vehicles, has had to raise cash several times to keep its lights on.

Burberry, the biggest luxury brand in the UK, has also come under so much pressure such that its stock has lost over 70% of its value in the past few years.

Kering, the parent company of Gucci, Yves Saint Laurent, Bottega Veneta, Balenciaga, Brioni, Creed, and Alexander McQueen, has been one of the most affected luxury goods companies.

Its woes are primarily because of Gucci, its biggest moneymaker that accounts for about 50% of its total sales. Its performance has contracted in the past few years, leading to several profit warnings.

Kering sales have plunged

Financial results released this week showed that the company’s first-quarter sales continued to worsen. 

Kering made €3.9 billion in Q1, down by 14% from the same period a year earlier. This decline occurred as its Asia-Pacific region declined by 25%, and those in Western Europe, North America, and Japan experienced double-digit declines. That is a sign that the company’s business is deteriorating across all regions.

Most importantly, Gucci has become its worst-performing brand in its portfolio. Gucci sales dropped by 24% to €1.57 billion. Its other houses business also deteriorated, with its sales falling by 11% to €733 million. 

The growth of Yves Saint Laurent, Bottega Veneta, and Eyewear businesses was not enough to offset Gucci’s plunge. 

Kering hopes that Demna Gvasalia to be Gucci’s artistic director, who replaced Sabato De Sarno. Demna will become the artistic director in July of this year and will come from Balenciaga, a company owned by Kering. 

Gucci’s sales have plunged because of the weak demand in China and the slow shift towards quit luxury. Analysts note that increased marketing by Kering diluted its brand in the past few years. At the same time, it has had leadership changes that have affected its brand.

History shows that some creative directors can help to boost sales. However, pegging a recovery to one person can be risky. For example, Daniel Lee, a well-known creative director who moved to Burberry, has failed to boost sales. 

Kering share price technical analysis

KER stock chart | Source: TradingView

The weekly chart shows that the Kering stock price has declined significantly over the past few years. This sell-off has continued after each of its financial results has been worse than expected. 

The stock dropped below the key support at €206.55, its lowest level on November 18 last year. It has remained below all moving averages. Specifically, the 50-week moving average has provided support. 

The Relative Strength Index has tilted downwards. Therefore, the stock will likely continue falling as sellers target the key support at €150, which is about 15% below the current level. 

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The DAX Index has staged a strong comeback in the past few weeks and is closing in on its all-time high as European indices become a safer haven than their American counterparts. It bottomed at €18,488 earlier this month and then rebounded to its current level of €22,000.

The blue-chip index that tracks the biggest German companies has held steady as investors remain hopeful that the US will reach a deal with the European Union. Without a deal, many DAX constituents will continue paying substantial levies to sell to their American customers. 

The index has also done well as the European Central Bank (ECB) has signaled that it will continue cutting interest rates to support the economy. Stocks do well when a central bank is slashing interest rates as this usually pushes more people from the lower-yielding bonds.

Most importantly, the German DAX jumped as the government announced that it would boost spending on defense and infrastructure. 

Top DAX Index earnings ahead

The DAX 40 Index will be in the spotlight in the coming weeks as many of its constituent companies publish their financial results. 

These earnings have started well. On Wednesday, SAP, the biggest company in the index, reported strong financial results, pushing its stock higher by over ten percent.

The company said that its operating profit rose to €2.5 billion in the first quarter, while its revenue soared by 11% to €9 billion. This growth was driven by its cloud business whose backlog jumped by 29%.

The management has stated that it expects its business to continue performing well, even as tariff jitters persist. That’s because it has tools that companies need to manage their supply chains well.

More companies in the DAX Index will publish their financial results next week. Deutsche Boerse, the €58 billion giant, will be the first one to publish its numbers next week. Its numbers come as the stock has jumped to a record high, making it one of the best performers in the index. It rose to a high of €280, up by 87% from its lowest level last year. 

Deutsche Boerse stock has jumped because of the resilience of the German market even as the economy improves. Its annual results showed that the net revenue jumped to over €5.8 billion, while the EBITDA jumped to over €3.3 billion. 

Deutsche Bank, Germany’s largest lender, will release its numbers next Tuesday. Like other European banks, Deutsche Bank’s stock has jumped to $25, up by 265% from its 2022 lows. It has benefited from high interest rates and the restructuring efforts made by Christian Sewing. 

Automakers like Mercedes-Benz, Volkswagen, and Porsche will also publish their financial results next week. Their numbers will provide more information on the impact of tariffs on the business. The other top companies to watch will be Deutsche Post and Adidas. 

DAX Index technical analysis

DAX chart | Source: TradingView

The daily chart shows that the German DAX Index has performed well over the past few weeks, jumping from a low of €18,488 earlier this month to €21,760. It has formed a V-shaped recovery and moved above the 50-day and 100-day moving averages.

The index has moved above the strong pivot reverse point at €21,250 of the Murrey Math Lines. It has retested the weak, stop & reverse point. 

Oscillators like the Relative Strength Index (RSI) and the MACD indicators have risen. The stock remains above the Ichimoku cloud indicator. Therefore, the stock will likely continue soaring as bulls target the all-time high of €23,485, which is about 8% above the current level. The stop-loss of this forecast is the major S&R level at €20,000.

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Nio stock price has bounced back this month as investors buy the dip. It has risen for eight consecutive days and is hovering at its highest level since April 1. It is up by over 30% from its lowest level this year, bringing its market cap to over $8.2 billion. Let’s explore whether the Tesla rival is a good buy today.

Nio’s business is growing

While the Nio stock price has crashed and erased billions of dollars in value over the years, its business is performing well, with sales increasing. 

Its business is being driven by its top brands like the ES8, ES7, ES6, EC7, ET5, and the recently launched ONVO, its mass market brand. 

Its annual results show that its annual revenue stood at $2.49 billion in 2019, a figure that then jumped to $9 billion in 2024. This represents an impressive 275% annual growth in an industry that has become highly competitive. 

The most recent data showed that its vehicle deliveries and revenues continued rising. It delivered 72,689 vehicles in the fourth quarter, up from the 50,045 that it delivered in the same quarter last year. 

This growth was driven by the inclusion of its Onvo vehicle sales, which have continued rising recently. Nio’s vehicle sales jumped by 13.2% to RMB 17.4 billion in the fourth quarter of last year. 

Most importantly, the vehicle margin rose to 13.1% from the previous 11.9%. For the year, its revenue rose by 18.2% to RMB 58.23 billion, while its annual gross margin rose to 9.9%.

Challenges and opportunities

Nio hopes to continue growing its business by launching new models and entering new markets. Nio, its flagship vehicle brand, is doing well, while demand for its ONVO vehicles is growing. The only challenge is that it has faced some major production challenges. It hopes that Firefly, its third brand, will be a key player in its international business. 

The other challenge is that the company has largely failed to enter the United States, the most lucrative market for vehicles globally. Joe Biden placed a 100% tariff on all Chinese EV vehicles to protect local companies. 

The company is also facing challenges accessing other countries, especially in Europe, which has also placed tariffs on Chinese EVs. Europe argues that Beijing has delivered substantial subsidies to companies, undercutting its firms.

Furthermore, Nio is facing significant competition from companies such as BYD and XPeng. The main benefit for NIO is that the company owns a battery swapping infrastructure that helps to deal with range anxiety. 

BYD has announced that it has created a battery that charges for about 5 minutes. And in a statement this week, CATL said that its battery charged faster than that. Such faster charging speeds could make the battery swapping technology almost worthless. Fortunately, NIO buys its batteries from CATL.

Nio is also incurring substantial losses. Its annual loss jumped to RMB 22.4 billion, up from RMB 20.7 billion a year earlier. As a result, it has continued to dilute its shareholders. It raised over H$ 4 billion by selling shares earlier this month.

Read more: Nio stock price forecast: epic comeback likely after earnings

Nio stock price analysis

Nio stock chart | Source: TradingView

The daily chart shows that the Nio share price has rebounded over the past few days, moving from a low of $3.05 this month to $3.93, its highest swing since April 1.

It has moved above the key resistance level at $3.60, its lowest level in April and August last year. 

The stock is poised to move above the 50-day moving average, while oscillators such as the Relative Strength Index (RSI) and MACD have indicated an upward trend. Therefore, the stock will likely continue soaring as bulls target the key resistance at $5.57, up by 41% from the current level. A drop below the support at $3 will invalidate the bullish view. 

Read more: NIO, XPeng, and other Chinese EV stocks surge on strong sales forecast as Tesla stumbles amid weak demand

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