The KOSPI faces a test of whether it can rebound after retreating to the 6,600 level last week under a surge in U.S. Treasury yields and profit-taking. Foreign investors kept selling even after Samsung Electronics (005930.KS) posted its best quarterly earnings on record, and concerns over a supply-demand vacuum are mounting as share buybacks by Samsung Electronics and SK hynix (000660.KS) enter their final stage. Market attention is turning to this week's U.S. consumer price index and producer price index for signs of whether interest rate pressure will ease, and to the durability of corporate earnings led by semiconductors.
The KOSPI closed last week at 6,625.93, down 377.81 points, or 5.39%, from the previous week, according to the Korea Exchange on the 12th. The index failed to escape the slide over just three trading sessions following the National Foundation Day holiday. Samsung Electronics' preliminary third-quarter operating profit, disclosed on the 8th, came in at 107.4 trillion won ($75.8 billion), up 782.5% from a year earlier and a record high on a quarterly basis. But the KOSPI fell 2.62% that day as selling that treated the strong results as a profit-taking opportunity combined with the burden of U.S. Treasury yields at their highest since the early 2000s and a wait-and-see mood ahead of the Hangeul Day holiday.
Foreign investors sold a net 6.47 trillion won on the main board over the three sessions last week, weighing on the index. Selling concentrated on the largest semiconductor stocks by market value, including SK hynix (3.64 trillion won) and Samsung Electronics (883.9 billion won), leaving the index unable to avoid a decline. Institutions also sold a net 2.39 trillion won over the period, while individuals were the only net buyers, at 6.36 trillion won.
The biggest supply-demand variable for the domestic market this week is the end of share buybacks by Samsung Electronics and SK hynix, which totaled 55 trillion won. Analysts say large-scale buying by other corporations purchasing their own shares was behind the KOSPI's ability to hold its floor even amid heavy foreign selling. Samsung Electronics completed its buyback on the 6th, and SK hynix has passed the bulk of its program and is also winding down. Net buying by other corporations slowed sharply to 2.48 trillion won over the three sessions last week. Experts say that once the buyback breakwater is removed, share prices will be more directly exposed to shifts in foreign and institutional flows and to the strength of corporate earnings.
Externally, U.S. inflation data and the global economic calendar are the key variables that will determine the market's direction. Early in the week, on the 12th, the U.S. bond market and the Japanese and Canadian stock markets are closed. On the technology front, the OCP Global Summit runs from the 12th to the 15th in San Jose, California. With the market more sensitive to the durability of big tech's artificial intelligence infrastructure spending and the pace of monetization since the recent dispute over OpenAI's annualized revenue, attention is focused on presentations covering areas such as the efficiency of AI data center construction.
The U.S. small business optimism index and existing home sales for September are due on the 13th. On the 14th, the U.S. September consumer price index, the Federal Reserve's Beige Book report on economic conditions, and China's September inflation and trade data are scheduled. The U.S. September producer price index and retail sales follow on the 15th, and Korea's September export and import price indexes and U.S. September industrial production are set for the 16th. Securities analysts expect that if the CPI and PPI point to price stability amid slowing employment data, easing concerns over further tightening could bring U.S. Treasury yields down and relieve pressure from oil prices and the won.
Despite the pickup in short-term volatility, securities analysts are pointing to the KOSPI's valuation appeal and forecasting a range of 6,600 to 7,100 this week. The index's 12-month forward price-to-earnings ratio stands at 5.26 times, near a historic low. Some analysts say applying a forward P/E of just 6 times would allow a recovery to the 7,700 level. Experts advised maintaining exposure to leading AI and semiconductor value chain stocks while sorting through sectors that are undervalued relative to earnings, such as shipbuilding, automobiles, retail distribution and insurance, along with green energy and secondary battery names expected to benefit from policy ahead of the U.S. midterm elections.
