All three major US indexes rise

KOSPI 200 night futures up 0.97%

Foreigners net sold 2.1 trillion won last week

Kiwoom Securities sees Kospi in 6,600–7,200 range this week

The Kospi and Kosdaq indexes are displayed on a screen at the Hana Bank dealing room in Jung-gu, Seoul, on Friday. The Kospi closed down 124.01 points, or 1.76 percent, at 6,909.91 that day. [Yonhap]
The Kospi and Kosdaq indexes are displayed on a screen at the Hana Bank dealing room in Jung-gu, Seoul, on Friday. The Kospi closed down 124.01 points, or 1.76 percent, at 6,909.91 that day. [Yonhap]

The Kospi, which clawed back above 7,000 last week only to slip back into the 6,900 range, is expected to attempt a rebound Monday. US stocks ended a five-session losing streak and crude oil prices — which had surged past $100 a barrel — pulled back, easing pressure on the domestic market. Whether foreign investors resume net buying ahead of the Federal Reserve's FOMC meeting Wednesday (local time) is seen as the key factor in whether the Kospi can hold above 7,000.

On Friday (local time), the Dow Jones Industrial Average rose 0.98 percent, the S&P 500 gained 0.86 percent and NASDAQ advanced 0.96 percent. The Philadelphia Semiconductor Index climbed 1.81 percent. The MSCI Korea ETF rose 3.25 percent, while KOSPI 200 night futures gained 0.97 percent.

Falling oil prices lifted investor sentiment. News that Iran and Gulf states agreed to meet in Oman on Monday to discuss passage through the Strait of Hormuz sent Brent crude November futures down 2.81 percent to $104.61 a barrel, while West Texas Intermediate October futures fell 2.37 percent to $100.05 a barrel.

"US stocks rose on expectations that Strait of Hormuz transit would resume, which weighed on oil prices, as well as optimism over expanded data center investment," said Han Ji-young, a researcher at Kiwoom Securities.

The domestic market had recovered above 7,000 last week on strength in semiconductor stocks including Samsung Electronics and SK hynix, but gave back those gains in the latter half of the week as interest rates and oil prices climbed. According to Korea Exchange, the Kospi closed at 6,909.91 on Friday, up 3.33 percent for the week. The index had risen as high as 7,051.64 on Wednesday, reclaiming 7,000 on a closing basis, before falling for two consecutive sessions Thursday and Friday.

Foreign investors net sold 2.13 trillion won ($1.59 billion) on the Kospi market last week, while retail investors offloaded 9.91 trillion won. Institutions, by contrast, net bought 3.59 trillion won, and other corporations net purchased 8.49 trillion won.

The most important event this week is the September FOMC meeting Wednesday (local time). The US August consumer price index rose 3.4 percent year-on-year, in line with market expectations, but core CPI climbed 0.3 percent month-on-month, exceeding the forecast of 0.2 percent. According to CME FedWatch, the probability of a 0.25 percentage point rate hike at the September meeting stood at 86.3 percent as of Saturday. The yield on the 10-year US government bond briefly touched the 4.99 percent range immediately after the CPI release before retreating to the low-to-mid 4.9 percent range.

Market attention is shifting to whether additional tightening will follow any rate increase. The researcher said the key question is "whether a September rate hike would be a one-off, pre-emptive move to head off a re-acceleration of inflation, or the start of a new tightening cycle."

At the FOMC, the dot plot released alongside the rate decision and remarks by Federal Reserve Chair Kevin Warsh will also be closely watched. Lee Sang-jun, a researcher at NH Investment Securities, said the direction of the US 30-year yield in response to the dot plot and Chair Warsh's comments will matter more than the rate decision itself. He added that interest rate volatility could persist even after the FOMC, given that geopolitical risk in the Middle East has not subsided.

Analysts say foreign buying must return for the Kospi to consolidate above 7,000. Han said "whether foreigners resume net buying as the market digests the September FOMC will be the condition for the Kospi to settle above 7,000." Kiwoom Securities set its projected Kospi range for this week at 6,600 to 7,200 points.

The Bank of Japan's monetary policy meeting is also scheduled for Thursday and Friday. Markets expect the BOJ to raise its benchmark interest rate. The researcher said that if the BOJ signals a strong willingness to tighten further, a rise in the yen and Japanese government bond yields could reignite concerns about the unwinding of yen carry trades.

Semiconductor stocks are also expected to see heightened volatility early in the week. While the Philadelphia Semiconductor Index rose 1.81 percent on Friday, memory and storage names fell — Micron lost 0.22 percent, SanDisk dropped 3.50 percent, Western Digital declined 2.98 percent and Seagate fell 3.73 percent. Reports over the weekend suggested some major AI companies may be slowing the pace of model development, though Kiwoom Securities said it was too early to interpret this as a sign of weakening AI investment.

Han acknowledged that "a short-term expansion of volatility is unavoidable," but said investors should "prioritize a strategy of using this as an opportunity to increase equity exposure rather than raising cash holdings."


hajun825@heraldcorp.com