Tariff Truce, Tech Regulations, Middle East Tensions… Key Variables for Holiday Market: US-China Summit

With the KOSPI index closing higher on the last trading day before the Chuseok holiday, market attention is expected to focus on the US-China summit scheduled for the 24th local time in the United States.

US-China relations are intertwined with whether a tariff truce extension will be granted and whether regulations on AI (artificial intelligence) and semiconductor technology competition will emerge. Reports indicated that executives of Chinese AI companies participating in IPOs (initial public offerings) might accompany Chinese President Xi Jinping on his US visit, but this became uncertain at the last minute. Consequently, speculation is rampant regarding which direction US-China relations will take following the summit.

On this day, the KOSPI index closed at 7080.92, up 63.01 points (0.90%) from the previous trading day. Foreign investors and individuals sold net amounts of 510.6 billion won and 1.44 trillion won, respectively, while institutional investors bought net amounts of 318.8 billion won. Given that the index rose despite foreign investors and individuals selling a combined net amount exceeding 1.9 trillion won, it appears that buying pressure from other legal entities drove the increase.

The KOSPI opened at 7153.99, up 136.08 points (1.94%), but reduced its intraday gains. The intraday low was 7014.98 (-0.04%). Samsung Electronics closed up 3.25% at 285,500 won. SK Hynix closed the session up 1.20% at 1.862 million won.

Other stocks that rose included △Samsung Electronics Preferred (+4.02%), △SK Square (+5.03%), △Samsung Electro-Mechanics (+1.41%), and △LG Energy Solution (+0.29%).

Stocks that fell included △Hyundai Motor (-1.94%), △Samsung Biologics (-1.80%), and △KB Financial Group (-1.42%). Samsung C&T closed flat (0.00%).

Jung Hee-chan, a researcher at Samsung Futures, stated, "With the US-China summit scheduled during the holiday period, it is necessary to pay close attention to issues such as whether the trade truce between the two countries will be extended." If the US-China trade truce is not extended and high tariffs are reimposed, domestic companies that rely heavily on the United States and China as major export markets could face increased burdens. Conversely, if the summit confirms an extension of the trade truce or a postponement of technology regulations, investor sentiment may improve.

However, it remains uncertain to what extent tensions between the US and China will ease or economic cooperation discussions will progress. Bloomberg reported, citing a senior official of the US administration, that President Xi is not expected to bring members of the Gi Eop-in (CEO) delegation with him. Previously, the South China Morning Post (SCMP) had reported that executives from Zhongji InnoLight might accompany President Xi on his US visit.

Zhongji InnoLight is a company designated by the US Department of War as a Chinese military enterprise (CMC). After it was revealed that the National Pension Service invested in the company's Hong Kong IPO, concerns about geopolitical risks were raised in the National Assembly, and Minister of Health and Welfare Jeong Eun-kyung announced that she would review investment principles.

The KOSDAQ index closed at 844.48, up 10.10 points (1.21%) from the previous day. Foreign investors sold net amounts of 48.6 billion won, while individuals and institutional investors bought net amounts of 32.1 billion won and 6.1 billion won, respectively.

Stocks that rose included △Alteogen (+0.20%), △EcoPro BM (+0.67%), △Jusung Engineering (+2.95%), △Wonik IPS (+2.61%), △IOTech (+1.69%), △Simtek (+0.95%), and △HPSP (+2.21%).

Rainbow Robotics (-1.14%) and Rino Industrial (-0.93%) fell. EcoPro closed flat (0.00%).

Han Ji-young, a researcher at Kiwoom Securities, stated, "While it is important to confirm whether the US-China summit will extend the tariff truce or introduce regulations on AI and semiconductor technology competition, we also believe that developments in the Middle East, such as the resumption of diplomatic dialogue between the US and Iran and changes in cargo volume through the Strait of Hormuz, must be closely monitored."