The Seoul stock market is expected to experience volatile trading this week (the 21st–23) ahead of the Mid-Autumn Festival holiday. This is due to numerous external variables that could shake the market, including the U.S.-China summit, Middle East war risks, and fallout from the U.S. base rate hike.
According to the Korea Exchange on the 20th, last week (the 14th–18) saw the KOSPI index close at 6,894.23, down 15.68 points (0.23%) from the previous weekend's level of 6,909.91. During this period, foreign investors and retail investors sold net amounts worth 876.27 billion won and 27.13 billion won, respectively. Institutional investors purchased a net amount of 87.99 billion won.
Last week, the KOSPI initially declined due to concerns over AI (artificial intelligence) growth moderation and anticipation surrounding the U.S. Federal Open Market Committee (FOMC) meeting in September, but rebounded after the FOMC concluded. This was because monetary policy uncertainty eased and international oil prices fell. Additionally, Jensen Huang, CEO of NVIDIA, stated that semiconductor sales next year will double compared to this year, reviving investor sentiment toward semiconductor stocks.
This week, forecasts suggest the domestic stock market will react with optimism or pessimism to external variables such as fallout from the U.S. base rate hike, the U.S.-China summit, and Middle East war risks. With the domestic market closed for the Mid-Autumn Festival holiday on the 24th–25, caution is expected to rise ahead of the break. NH Investment & Securities forecasts that the KOSPI index will fluctuate between 6,400 and 7,500 this week.
The most significant topic at the U.S.-China summit scheduled for the 24th (local time) that will have the greatest impact on the domestic stock market is the AI agenda. If the United States eases its semiconductor export restrictions on China, investor sentiment toward domestic semiconductor stocks could deteriorate.
Fallout from the U.S. base rate hike and Middle East war risks are also key variables. Lee Kyung-min, head of FICC Research at Daishin Securities, analyzed: "With the U.S. midterm elections approaching, President Donald Trump has shown a conciliatory attitude toward resolving geopolitical risks with Iran, and China's engagement in dialogue with Iran represents a positive development for oil price stability."
Experts in the financial investment industry advised that despite external variables, KOSPI remains undervalued, so investors should expand their investment allocation.
Na Jeong-hwan, a researcher at NH Investment & Securities, stated: "The consensus estimate for KOSPI net income this year is 806 trillion won, and next year is projected at 1,048 trillion won, maintaining an upward trend. The KOSPI's 12-month forward PER (price-to-earnings ratio) stands at 5.5 times, the lowest level in history." He added: "The current market situation reflects doubt about earnings rather than actual earnings performance. As AI company results, including Micron's earnings report on the 30th, are confirmed, this doubt will gradually dissipate."
Historically, the KOSPI has tended to rebound after the Mid-Autumn Festival holiday. Based on the past 10 years, the average KOSPI return over the five trading days before the holiday was -0.42%, while the average return over the five trading days after the holiday was 0.68%.
Experts highlighted semiconductors as a sector of note due to excessive declines and undervaluation relative to earnings. Samsung Electronics' decision to implement a special dividend is also a key investment factor. To receive the special dividend, investors must purchase Samsung Electronics or its preferred shares by the 28th. Lee Jae-won, a researcher at Yuanta Securities, advised: "Investors should strategically maintain investments focused on semiconductors and large-cap KOSPI stocks. If oil prices and market interest rates stabilize further and foreign net buying continues, the recent decline presents a buying opportunity."
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