The KOSPI index showed mixed trading during morning hours on the 17th as the Federal Reserve System (Fed·Federal Reserve) fully adopted a hawkish stance, creating an atmosphere of cautious observation.
At 11:20 a.m. that day, the KOSPI was calculated at 6,726.62, up 8.65 points (0.13%) from the previous trading day. The index opened with a 0.91% gain over the prior day but turned downward within 30 minutes of opening, subsequently repeating fluctuations within ±1%.
According to cumulative data from Korea Exchange and NextTrade, other corporations purchased net worth of 675.8 billion won, individuals bought 376.5 billion won in net purchases, while foreign investors sold 944.1 billion won in net sales and institutional investors sold 112.9 billion won in net sales. Foreign investors have entered a period of net selling for seven consecutive trading days.
While Samsung Electronics and SK Hynix showed weakly flat trends with Samsung Electric down by over 2%, Samsung C&T maintained a strongly flat trend, resulting in mixed fortunes among semiconductor-related and affiliated stocks.
By sector, KOSPI machinery equipment rose over 2%, while transportation equipment, transportation warehouses, and construction gained over 1%. Shipbuilding stocks saw a rebound. Conversely, entertainment and culture showed weakness of over 1%. The KOSDAQ index closed at 820.74, up 4.76 points (0.58%) from the previous day, showing mixed movement alongside the KOSPI.
Following the conclusion of the September Federal Open Market Committee (FOMC) meeting overnight, the Federal Reserve raised the base rate by 0.25 percentage points (25 basis points). When Kevin Warsh, Federal Reserve Chair, stated that he would not judge current financial conditions as sufficiently restrictive, market expectations for additional interest rate hikes within the year followed in succession.
Even as a tightening signal from the Federal Reserve, typically classified as negative news for stock markets, materialized, the KOSPI index narrowed its fluctuation range on this day despite pre-market concerns. On the 16th (local time), all three major U.S. indices (Dow Jones 30, S&P 500, NASDAQ) closed lower.
Market analysts suggest that fears of rising interest rates triggered by long-term U.S. Treasury bonds were already reflected in advance in the domestic market. The KOSPI index has given back its gains from this month and is trading below last month's closing price (6,820.02).
In the securities industry, experts repeatedly advised that it is necessary to closely monitor the direction of 10-year U.S. Treasury yields, international oil prices, and the won/dollar exchange rate.
IBK Investment & Securities researcher Byun Jun-ho stated, "Concerns over interest rate hikes will remain in the market and act as a burden, but the decline is not expected to be large." He added, "This is because the domestic stock market showed preliminary corrections since last week, U.S. market rates did not change significantly following the FOMC results, and the Federal Reserve's economic outlook remains optimistic."
He further noted, "From a domestic perspective, more attention should be paid to rising exchange rates than interest rates." He explained, "While Korea is expected to maintain interest rate freezes after consecutive hikes in July and August, the Federal Reserve is anticipated to implement additional hikes, which could put upward pressure on the dollar. Moreover, since the exchange rate has recently fallen sharply, it is necessary to monitor foreign selling pressure."
Daishin Securities researcher Lee Kyung-min said, "We must consider the test of support at the 6,600 index level," while adding, "This presents an opportunity to prepare for the earnings season. Scheduled events include Micron's earnings announcement at the end of this month, South Korea's September export-import data on the 1st of next month, and Samsung Electronics' earnings guidance release in early next month."
The researcher also stated, "In the long term, we must prepare for a trend heading toward the late 8,000 level and historical highs. Given that leading price-to-earnings ratios (PERs) remain below six times and considering valuation normalization, we are focusing on sectors that are overvalued relative to earnings or undervalued compared to performance: IT hardware, semiconductors, retail, automobiles, secondary batteries, and electrical equipment."
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