Kospi seen trading between 5,300 and 5,800 this week

US-Iran tensions send oil prices surging

FOMC decision, Big Tech earnings due this week

Alphabet, Microsoft to report results early Thursday

The Kospi is displayed at the dealing room of Hana Bank's headquarters in Jung-gu, Seoul, on Thursday. The index closed up 16.53 points, or 0.30 percent, at 5,550.30. [Yonhap]
The Kospi is displayed at the dealing room of Hana Bank's headquarters in Jung-gu, Seoul, on Thursday. The index closed up 16.53 points, or 0.30 percent, at 5,550.30. [Yonhap]

South Korea's stock market is expected to remain volatile this week as investors digest a string of major domestic and overseas events, including the US Federal Open Market Committee meeting, Big Tech earnings and quarterly results from Samsung Electronics and SK hynix. The Kospi is forecast to trade between 5,300 and 5,800, with analysts warning that intraday swings could widen ahead of the key events amid a lack of clear directional momentum.

This week also brings the release of US September personal consumption expenditures price index data and Israel's general election. On the corporate front, Amazon, Alphabet and Microsoft are among the major US technology companies set to report earnings, while Samsung Electronics and SK hynix will release their finalized third-quarter results. Earnings from Hanwha Ocean, Hyundai Motor Company, APR and Hanwha Aerospace are also seen as potential market variables.

The Kospi swung sharply on Friday, plunging more than 4 percent intraday before recovering to close up 16.53 points, or 0.30 percent, at 5,550.30. The index opened down 2.36 percent at 5,403.17 and fell as low as 5,305.98 during the session before turning positive with about 20 minutes left in trading.

The early selloff was driven by concerns over the profitability of AI investment, after Meta reported a deterioration in free cash flow and Tesla lowered its capital expenditure outlook. The market recovered, however, after SK hynix announced it was halting its review of a US initial public offering for its subsidiary Solidigm, easing fears that a dual listing would dilute the parent company's value. Bargain hunters moved into semiconductor stocks, helping the market claw back its losses. SK hynix closed up 4.42 percent and Samsung Electronics gained 0.47 percent.

Over the weekend, renewed military tensions between the United States and Iran raised the prospect of a broader risk-off shift. Reports emerged that the US and Israel were considering resuming military operations against Iran, and Iran warned it could target neighboring countries' economic and civilian facilities if attacks resumed. International oil prices surged, with December Brent crude futures hitting $116.72 per barrel — the highest level in roughly six months since April 29. West Texas Intermediate futures also topped $100, reaching $103.27 per barrel.

US equities also fell on Friday. The Dow Jones Industrial Average dropped 1.23 percent, the S&P 500 fell 0.52 percent and the NASDAQ Composite declined 0.21 percent. One source of relief came over the weekend, however, as Moody's kept France's sovereign credit rating at Aa3 with a negative outlook, averting an outright downgrade despite the country's fiscal instability and spreading protests.

"The FOMC this week is likely to pass without major surprises," said Lee Kyung-min, an analyst at Daishin Securities. "The key will be Big Tech earnings." He added that results from Microsoft, Google and Amazon — and whether they signal further capital expenditure expansion — along with Samsung Electronics and SK hynix's third-quarter figures and any additional shareholder return policies, would be the critical factors to watch.

Han Ji-young, an analyst at Kiwoom Securities, said the Kospi's intraday recovery from a more than 4 percent drop last week was reassuring, but cautioned that the market had not yet shaken off its headwinds. Concerns over Big Tech profitability had grown following Meta's free cash flow deterioration, and the burden of high interest rates and elevated oil prices, combined with lingering skepticism over corporate earnings estimates, remained. "Investors should treat a scenario of widening intraday volatility without any clear directional trend as the base case," Han said.

The earnings results and shareholder return policies of South Korea's major semiconductor companies are also key variables. Both Samsung Electronics and SK hynix need to demonstrate AI chip demand and earnings growth through their results while also meeting shareholder return expectations. Han flagged Samsung Electronics' dividend and future shareholder return policy — as well as whether SK hynix would flesh out additional return measures following its decision to halt the Solidigm listing review — as the main factors to watch. With both companies' share buyback programs having ended in October, whether they can restore earnings credibility and present concrete shareholder return plans is seen as pivotal to the direction of market flows and investor sentiment.


kacew@heraldcorp.com